##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-K (Mark one)
 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
  OR [   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-23359 ANCHOR GLASS CONTAINER CORPORATION 
 Delaware
    
    59-3417812(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    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 Securities registered pursuant to Section 12(b) of the Act:None Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.10 per share  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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this
Form 10-K. [X]. Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act. Yes [   ] No [X]. Aggregate market value of voting and non-voting common equity held by non-affiliates at June 30, 2003:  Number of shares outstanding of common stock at March 1, 2004:
24,514,843 shares DOCUMENTS INCORPORATED BY REFERENCE Portions of Items 5 and 10 and Items 11, 12, 13 and 14 are incorporated by reference from the definitive
Proxy Statement in connection with the Annual Meeting to be held June 9, 2004.




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TABLE OF CONTENTS  PART IITEM 1. BusinessITEM 2. PropertiesITEM 3. Legal ProceedingsITEM 4. Submission of Matters to a Vote of Security HoldersPART IIITEM 5. Market for the Registrants Common Equity and Related Stockholder MattersITEM 6. Selected Financial DataITEM 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsITEM 7A. Quantitative and Qualitative Disclosures about Market RiskITEM 8. Financial Statements and Supplementary DataITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureITEM 9A. Controls and ProceduresPART IIIITEM 10. Directors and Executive Officers of the RegistrantITEM 11. Executive CompensationITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersITEM 13. Certain Relationships and Related TransactionsITEM 14. Principal Accountant Fees and ServicesPART IVITEM 15. Exhibits, Financial Statement Schedules and Reports on Form 8-KReport of Independent Certified Public AccountantsSTATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)BALANCE SHEETSSTATEMENTS OF CASH FLOWSSTATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)NOTES TO FINANCIAL STATEMENTSSIGNATURESStatement Re: computataion of ratio of earningsCode of EthicsCertification of CEOCertification of CFO906 Certification of CEO and CFO    Table of Contents  
 PART I 
 ITEM 1. Business. Company Overview Anchor Glass Container Corporation (the Company) is the third largest
manufacturer of glass containers in the United States. Anchor has nine
strategically located facilities where it produces a diverse line of flint
(clear), amber, green and other colored glass containers for the beer,
beverage, food, liquor and flavored alcoholic beverage markets. Products, Markets and Customers The Company produces glass containers for the beverage and food industries
in the United States. Substantially all of the Companys glass containers are
produced to customer specifications. In addition, most of the Companys sales
are pursuant to customer contracts with average terms of three to five years
from inception. The table below provides a summary of net sales and the
approximate percentage of net sales by product group for each of the three
years ended December 31, 2003. Years ended December 31,Products
    
    2003
    
    2002
    
    2001(dollars in millions)Beer/Flavored Alcoholic Beverages
    
    $
    441.1
    
    
    
    62.1
    %
    
    $
    419.1
    
    
    
    58.6
    %
    
    $
    375.4
    
    
    
    53.4
    %Food
    
    
    81.5
    
    
    
    11.5
    
    
    
    79.4
    
    
    
    11.1
    
    
    
    90.3
    
    
    
    12.9Liquor
    
    
    79.7
    
    
    
    11.2
    
    
    
    83.5
    
    
    
    11.6
    
    
    
    89.6
    
    
    
    12.7Beverages
    
    
    77.1
    
    
    
    10.9
    
    
    
    100.6
    
    
    
    14.1
    
    
    
    108.6
    
    
    
    15.5Other
    
    
    30.5
    
    
    
    4.3
    
    
    
    33.0
    
    
    
    4.6
    
    
    
    38.3
    
    
    
    5.5Total
    
    $
    709.9
    
    
    
    100.0
    %
    
    $
    715.6
    
    
    
    100.0
    %
    
    $
    702.2
    
    
    
    100.0
    %
 There can be no assurance that the information provided in the preceding
table will be indicative of the glass container product mix of the Company for
2004 or in subsequent years. Managements strategy is to focus on shifting its
product mix towards those products management believes likely to improve
operating results. The Companys largest customer, Anheuser-Busch Companies, Inc.
(Anheuser-Busch), accounted for approximately 53.3% of its net sales for the
year ended December 31, 2003. In 2003, the Company entered into a multi-year
supply agreement with Snapple Beverage Group, Inc. and Motts Inc., affiliates
of Cadbury Schweppes plc, to supply 100% of their requirements for 16 oz.
Snapple bottles and Nantucket Nectars and Yoo-hoo bottles, as well as for
several Motts items. Performance under this multi-year contract with certain
affiliates of Cadbury Schweppes began on January 1, 2004. Manufacturing Manufacturing The Companys manufacturing facilities are generally located in geographic
proximity to its customers due to the significant cost of transportation and
the importance of prompt delivery to customers. Most of the Companys
production is shipped by common carrier to customers generally within a
150-mile radius of the plant in which it is produced. The glass container manufacturing process involves a high percentage of
fixed costs. Standard input costs are similar among manufacturers and include
soda ash, sand, limestone and energy costs. The Company conducts regular
maintenance on all of its operating equipment.




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Raw Materials and Suppliers Sand, soda ash, limestone, cullet (reclaimed glass), corrugated packaging
materials and energy, primarily natural gas, are the principal raw materials
that are used in the Companys manufacturing operations. All of these materials
are available from a number of suppliers and the Company is not dependent upon
any single supplier for any of these materials. The Company believes that
adequate quantities of these materials are, and will continue to be, available
from various suppliers. All of the Companys glass melting furnaces are equipped to burn natural
gas, which is the primary fuel used at the Companys manufacturing facilities.
Two of the Companys furnaces, refurbished in 2003, are equipped to utilize
oxygen in conjunction with the burning of natural gas, increasing the overall
efficiency of the furnace. Backup systems are in place at some facilities to
permit the use of fuel oil or propane, to the extent cost effective and
permitted by applicable laws and regulations. Electricity is used in certain
instances for enhanced melting. Prices for natural gas have fluctuated significantly in recent years. As
such, it remains one of the largest and the most volatile cost components of
the Companys operations. The Companys current strategy is to enter into
hedging transactions from time to time on an opportunistic basis. The Company
has currently hedged certain of its estimated natural gas purchases extending
into 2005 through the purchase of natural gas futures. The Company does not
enter into hedging transactions for speculative trading purposes, but rather to
lock in energy prices. Also, the Company enters into put and call options for
purchases of natural gas. Increases in the price of natural gas adversely affect the Companys costs
and margins. Since 2000, closing prices for natural gas have fluctuated
significantly from a low of $1.830 per million BTUs (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 March 2004 closed at $5.150
per MMBTU. Quality Control The Company maintains a program of quality control with respect to
suppliers, line performance and packaging integrity for glass containers. The
Companys production lines are equipped with a variety of automatic and
electronic devices that inspect containers for dimensional conformity, flaws in
the glass and various other performance attributes. Additionally, products are
sample inspected and tested by Company employees on the production line for
dimensions and performance and are also inspected and audited after packaging.
Containers that do not meet quality standards are crushed and recycled as
cullet. The Company has not experienced any significant quality control issues
in recent years. The Company monitors and updates its inspection programs to keep pace with
technology and customer demands. Samples of glass and raw materials from its
plants are routinely chemically and electronically analyzed to monitor
compliance with quality standards. Laboratories are also maintained at each
manufacturing facility to test various physical characteristics of products. 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 such seasonal demands. 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. Customer Service The Companys sales and marketing efforts are targeted primarily to
established customers with whom it enjoys long-standing relationships. As a
result, an important focus of the Companys sales and marketing is customer 2




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service, and it seeks to respond quickly to customer needs. To this end,
the Company has customer service managers responsible for scheduling, sales
forecasting and coordinating the various aspects of delivering product to its
customers. The Company maintains both low-capacity and high-capacity forming
equipment, which allows it to be more flexible and responsive to changes in its
customers product mix and shipment location requests. The Companys equipment
mix also enables it to produce both high-volume products and products that
require shorter production runs, such as new product introductions or specialty
niche products, enhancing its responsiveness and flexibility as a supplier. Environmental and Other Governmental Regulations Environmental Regulation and Compliance The Companys operations are subject to Federal, state and local
environmental laws and regulations including, but not limited to, the Federal
Water Pollution Control Act of 1972, the Federal Clean Air Act, the Federal
Resource Conservation and Recovery Act and the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (CERCLA). Among
the activities subject to environmental regulation are the disposal of checker
slag (furnace residue usually removed during furnace rebuilds), the disposal of
furnace bricks containing chromium, the disposal of waste, the discharge of
water used to clean machines and cooling water, dust emissions produced by the
batch mixing process, maintenance of underground and above ground storage tanks
and air emissions produced by furnaces. In addition, the Company is required to
obtain and maintain environmental permits in connection with its operations.
Many environmental laws and regulations provide for substantial fines and
criminal sanctions for violations. While there can be no assurance that
material costs or liabilities will not be incurred, the Company believes it is
in material compliance with applicable environmental laws and regulations. Certain environmental laws, such as CERCLA, or Superfund, and analogous
state laws, provide for strict, and under certain circumstances, joint and
several liability for investigation and remediation of releases of hazardous
substances into the environment including soil and groundwater. These laws may
apply to properties presently or formerly owned or operated by an entity or its
predecessors, as well as to conditions at properties at which wastes
attributable to an entity or its predecessors were disposed. The Company is
conducting remediation of soil and groundwater at certain of its facilities,
and in light of historical practices, may in the future be required to perform
additional corrective actions. The Company is defending a limited number of
legal proceedings where third parties are asserting that it is responsible for
costs related to the disposal of wastes under CERCLA or analogous state laws.
The Company does not believe that the resolution of any of these legal
proceedings will have a material adverse effect on its financial condition, but
the Company cannot be assured that it or entities for which it may be
responsible will not incur future environmental liability, as a result of these
or other proceedings, that could have a material adverse effect on its
financial condition or results of operations. Capital expenditures required for environmental compliance were
approximately $0.5 million in each of 2002 and 2003 and are anticipated to be
approximately the same in 2004. The Company anticipates that environmental
compliance will continue to require increased capital expenditures over time as
environmental laws or regulations or interpretations thereof or the nature of
the Companys operations may require it to make significant additional capital
expenditures to ensure compliance in the future. The Company has established a
reserve for environmental matters, including known or projected remediation
projects and projected exposure at third-party sites, in the amount of
approximately $9.2 million. The Company does not believe that its environmental exposure is in excess
of the reserves reflected on its balance sheet. In addition to its
environmental reserves, the Company also maintains an environmental impairment
liability insurance policy to address certain potential future environmental
liabilities at both identified operating and non-operating sites. However,
there can be no assurance that any future liability, particularly any arising
from presently unknown conditions, will not exceed the reserves or available
insurance coverage and have an adverse impact on the Companys operations or
financial condition. 3




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Employee Health and Safety Regulations The Companys operations are also subject to a variety of worker safety
laws. The Occupational Safety and Health Act of 1970, the United States
Department of Labor Occupational Health Administration Regulations and
analogous state laws and regulations mandate general requirements for safe
workplaces for all employees. The Company believes that it is operating in
material compliance with applicable employee health and safety laws. Competition The glass container industry in the United States is a mature, low-growth
industry. The Company and the other glass container manufacturers compete on
the basis of price, quality, reliability of delivery and customer service. The
industry is highly concentrated with three producers, including the Company,
estimated by the Company to have accounted for over 90% of 2003 domestic
volume. The Companys principal competitors are Owens-Brockway Glass Container
Inc. (Owens-Illinois), a wholly owned subsidiary of Owens-Illinois Group,
Inc., and Saint-Gobain Containers Co. (Saint-Gobain), a wholly owned
subsidiary of Compagnie de Saint-Gobain. Intellectual Property Rights The Company operates under a ten-year contract with Heye-Glas
International, expiring December 31, 2011, that provides it with heat
extraction technology for its forming machines. The Company also has a limited license with Owens-Illinois entitling the
Company to use certain existing patents, trade secrets and other technical
information of Owens-Illinois relating to glass manufacturing technology. Under
this license, the Company has the right to use technology in place through 2005
in exchange for license fees and thereafter will have a perpetual paid-up
license. While the Company holds various patents, trademarks and copyrights of its
own, it believes its business is not dependent upon any one of these. Employees As of February 28, 2004, the Company employed approximately 3,040 persons
on a full-time basis. Approximately 530 of these employees are salaried office,
supervisory and sales personnel. The remaining employees are represented
principally by two unions, the Glass Molders, Pottery, Plastics and Allied
Workers and the American Flint Glass Workers Union. The Companys two labor
contracts with the Glass Molders, Pottery, Plastics and Allied Workers and its
two labor contracts with the American Flint Glass Workers Union expire on March
31, 2005 and August 31, 2005, respectively. The Company has not experienced any significant work stoppages or
employee-related problems that had a material impact on its operations. The
Company considers its relationship with its employees to be good. 4




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ITEM 2. Properties. The Companys administrative and executive offices are located in Tampa,
Florida. The Company entered into a new lease covering this office space in
January 2004 for an initial term of eight years. The Company owns and operates nine glass container manufacturing
facilities. The Company also leases a building located in Streator, Illinois,
that is used as a machine shop to rebuild glass-forming and related machinery
and a mold shop located in Zanesville, Ohio, as well as additional warehouses
for finished products in various cities throughout the United States. Substantially all of the Companys owned properties and equipment at its
nine operating glass container manufacturing facilities are pledged as
collateral securing the Companys obligations under its 11% Senior Secured
Notes due 2013, aggregate principal amount of $300.0 million (the Senior
Secured Notes), its 11% Senior Secured Notes due 2013, aggregate principal
amount of $50.0 million (the Additional Notes) and the related indenture (the
Indenture). The following table sets forth certain information concerning the
Companys manufacturing facilities. In addition to these locations, the
Company owns plants at Keyser, West Virginia, Cliffwood, New Jersey,
Royersford, Pennsylvania, Chattanooga, Tennessee and Dayville, Connecticut that
have been closed and owns land in Gas City, Indiana and Marienville,
Pennsylvania. Number of
    
    Number of
    
    Building AreaLocation
    
    Furnaces
    
    Machines
    
    (Square Feet)Jacksonville, Florida
    
    
    2
    
    
    
    4
    
    
    
    624,000Warner Robins, Georgia
    
    
    2
    
    
    
    8
    
    
    
    864,000Lawrenceburg, Indiana
    
    
    1
    
    
    
    4
    
    
    
    504,000Winchester, Indiana
    
    
    2
    
    
    
    6
    
    
    
    627,000Shakopee, Minnesota
    
    
    2
    
    
    
    6
    
    
    
    360,000Salem, New Jersey (1)
    
    
    3
    
    
    
    6
    
    
    
    733,000Elmira, New York
    
    
    2
    
    
    
    6
    
    
    
    912,000Henryetta, Oklahoma
    
    
    2
    
    
    
    6
    
    
    
    664,000Connellsville, Pennsylvania
    
    
    2
    
    
    
    4
    
    
    
    624,000
   (1)
    
    A portion of the site on which this facility is located is
leased pursuant to several long-term leases. 
 ITEM 3. 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
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 4. Submission of Matters to a Vote of Security Holders. No matters were brought to a vote of security holders in the fourth
quarter of 2003. 5




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PART II 
 ITEM 5. Market for the Registrants Common Equity and Related Stockholder Matters. The Companys equity securities consist of one class of common stock. The
common stock began trading on September 25, 2003, the initial public offering
date. The common stock is traded on Nasdaq under the symbol AGCC. The high and
low sales prices quoted on Nasdaq for the fourth quarter ended December 31,
2003 were $16.75 and $13.90, respectively. The Company paid an initial cash dividend of $.04 per common share in the
fourth quarter of 2003. In January 2004, the Board of Directors of the Company
declared a cash dividend of $.04 per common share payable on March 15, 2004 to
shareholders of record on March 1, 2004. The amount and timing of dividends
payable on common stock is within the sole discretion of the Board of
Directors. The instruments governing the Companys indebtedness contain various
covenants that limit the amount of dividends the Company may pay. There are approximately 1,700 holders of the Companys common stock as of
March 1, 2004. Recent Sales of Unregistered Securities On August 5, 2003, the Company issued the Additional Notes. The Additional
Notes were acquired by Deutsche Bank Securities and Credit Suisse First Boston.
The Additional Notes were issued in reliance on the exemptions from the
registration requirements of the Securities Act of 1933, as amended (the
Securities Act) provided by Section 4(2) under the Securities Act. On February 7, 2003, the Company issued the Senior Secured Notes. The
Senior Secured Notes were acquired by Deutsche Bank Securities, Banc of America
Securities LLC and Credit Suisse First Boston. The Senior Secured Notes were
issued in reliance on the exemptions from the registration requirements of the
Securities Act provided by Section 4(2) under the Securities Act. On August 30, 2002, Anchor consummated a significant restructuring of its
existing debt and equity securities pursuant to a plan of reorganization (the
Plan) through a Chapter 11 reorganization (the Reorganization). As part of
the Reorganization, the Company sold and issued to Anchor Glass Container
Holding LLC (AGC Holding), an affiliate of Cerberus Capital Management, L.P.
(Cerberus), a leading New York investment management firm, 75,000 shares of
Companys Series C Participating Preferred Stock, par value $.01 (the Series C
Preferred Stock) for $75.0 million and 13,499,995 shares of common stock for
$5.0 million. These shares were issued in an offering not involving a public
offering pursuant to Section 4(2) of the Securities Act. As a condition to the
issuance, the purchasers consented to placement of a restrictive legend on the
certificates representing the securities. The Series C Preferred Stock was
redeemed with a portion of the proceeds of the initial public equity Offering.
Prior to redemption, the holders of the Series C Preferred Stock were entitled
to receive, when and as declared by the Board of Directors of the Company out
of legally available funds, cumulative dividends, payable quarterly in cash, at
a rate per annum equal to 12%. In connection with the Reorganization, the Company executed an agreement
with the Pension Benefit Guaranty Corporation (PBGC) which eliminated all
past-service pension liabilities, replaced by a one-time payment of $20.8
million and a $10.0 million per year fixed payment obligation to the PBGC for
ten years (the PBGC Agreement). On August 30, 2002, in connection with the
PBGC Agreement, the Company granted the PBGC a warrant for the purchase of
711,000 shares of Anchors common stock, with an exercise price of $5.27 per
share and term of ten years. In June 2003, the Company repurchased the
outstanding warrant held by the PBGC for a negotiated price of $1.5 million. Under the terms of the Plan, the holders of Anchors 11.25% First Mortgage
Notes due 2005, aggregate principal amount of $150.0 million (the First
Mortgage Notes) retained their outstanding $150.0 million of First Mortgage
Notes and received a consent fee for the waiver of the change-in-control
provisions, the elimination of pre-payment provisions and other non-financial
changes to the terms of the First Mortgage Notes (including the release of
Consumers U.S., Inc., the Companys former parent, as a guarantor). The holders
of Anchors 9.875% Senior 6




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Notes due 2008, aggregate principal amount of $50.0 million (the Senior
Notes) were repaid in cash at 100% of their principal amount. The holders of
Anchors mandatorily redeemable 10% cumulative convertible preferred stock (the
Series A Preferred Stock) were entitled to receive a cash distribution of
$22.5 million and the Series A Preferred Stock was cancelled. Anchors
redeemable 8% cumulative convertible preferred stock (the Series B Preferred
Stock) and common stock and warrants were cancelled and the holders received
no distribution under the Plan. The holders of the First Mortgage Notes were
repaid with proceeds from the issuance of the Senior Secured Notes. Portions required by this Item 5 are incorporated by reference from the
definitive Proxy Statement under the heading Executive Compensation. 7




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ITEM 6. Selected Financial Data. The following table sets forth certain historical financial information of
the Company. The selected financial data as of December 31, 2003 and 2002 and
for the year ended December 31, 2003, the four months ended December 31, 2002,
the eight months ended August 31, 2002 and the year ended December 31, 2001
have been derived from the Companys audited financial statements included
elsewhere in this Annual Report on Form 10-K. The selected financial data as of
December 31, 2001 has been derived from the Companys audited financial
statements. The selected financial data as of December 31, 2000 and 1999 and
for the two years then ended has been derived from the Companys financial
statements which had previously been audited by Arthur Andersen LLP. Arthur
Andersen has not reissued its report for purposes of this Annual Report on Form
10-K. The following information should be read in conjunction with the
Companys financial statements and Managements Discussion and Analysis of
Financial Condition and Results of Operations. The financial statements as of and for periods subsequent to August 31,
2002 are referred to as the Reorganized Company statements. The financial
statements prior to that date are referred to as Predecessor Company
statements. The financial statements for the eight months ended August 31, 2002
give effect to the restructuring and reorganization adjustments and the
implementation of fresh start accounting. The financial results for the year
ended December 31, 2002 include two different bases of accounting and,
consequently, after giving effect to the reorganization and fresh start
adjustments, the financial statements of the Reorganized Company are not
comparable to those of the Predecessor Company. Accordingly, the operating
results of the Reorganized Company and the Predecessor Company have been
separately disclosed. Reorganized Company
    
    Predecessor CompanyFour
    
    EightYear
    
    Months
    
    MonthsEnded
    
    Ended
    
    Ended
    
    Years Ended December 31,December 31,
    
    December 31,
    
    August 31,2003
    
    2002
    
    2002
    
    2001
    
    2000
    
    1999(dollars in thousands, except per share data)Statement of Operations Data:Net sales
    
    $
    709,943
    
    
    $
    211,379
    
    
    $
    504,195
    
    
    $
    702,209
    
    
    $
    629,548
    
    
    $
    628,728Cost of products sold
    
    
    660,402
    
    
    
    192,434
    
    
    
    451,619
    
    
    
    658,641
    
    
    
    603,061
    
    
    
    582,975Selling and administrative expenses
    
    
    26,963
    
    
    
    9,683
    
    
    
    19,262
    
    
    
    28,462
    
    
    
    33,222
    
    
    
    28,465Restructuring, net (1)
    
    
    
    
    
    
    
    
    
    
    (395
    )
    
    
    
    
    
    
    
    
    
    
    Related party provisions and
charges (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,668
    
    
    
    
    
    
    
    9,600Income (loss) from operations
    
    
    22,578
    
    
    
    9,262
    
    
    
    33,709
    
    
    
    (20,562
    )
    
    
    (6,735
    )
    
    
    7,688Reorganization items, net (3)
    
    
    
    
    
    
    
    
    
    
    47,389
    
    
    
    
    

    
    
    
    
    
    
    Other income (expense), net
    
    
    (156
    )
    
    
    450
    
    
    
    673
    
    
    
    106
    
    
    
    5,504
    
    
    
    2,080Interest expense
    
    
    (48,549
    )
    
    
    (10,381
    )
    
    
    (17,948
    )
    
    
    (30,612
    )
    
    
    (31,035
    )
    
    
    (27,279
    )Net income (loss)
    
    
    (26,127
    )
    
    
    (669
    )
    
    
    63,823
    
    
    
    (51,068
    )
    
    
    (32,266
    )
    
    
    (17,511
    )Series C preferred stock dividends
    
    
    (7,263
    )
    
    
    (3,022
    )Excess fair value of consideration
transferred over carrying value of
Series C preferred stock upon
redemption (4)
    
    
    (38,118
    )Series A and B preferred stock
dividends
    
    
    
    
    
    
    
    
    
    
    (4,100
    )
    
    
    (14,057
    )
    
    
    (14,057
    )
    
    
    (13,650
    )Income (loss) applicable to common
stock
    
    $
    (71,508
    )
    
    $
    (3,691
    )
    
    $
    59,723
    
    
    $
    (65,125
    )
    
    $
    (46,323
    )
    
    $
    (31,161
    )Basic net income (loss) per share
applicable to common stock
    
    $
    (4.37
    )
    
    $
    (0.27
    )
    
    $
    11.37
    
    
    $
    (12.40
    )
    
    $
    (8.82
    )
    
    $
    (5.93
    )Basic weighted average number of
common shares outstanding
    
    
    16,364,196
    
    
    
    13,449,995
    
    
    
    5,251,356
    
    
    
    5,241,356
    
    
    
    5,241,356
    
    
    
    5,241,356Diluted net income (loss) per
share applicable to common stock
    
    $
    (4.37
    )
    
    $
    (0.27
    )
    
    $
    1.89
    
    
    $
    (12.40
    )
    
    $
    (8.82
    )
    
    $
    (5.93
    )Diluted weighted average number of
common shares outstanding
    
    
    16,364,196
    
    
    
    13,449,995
    
    
    
    33,805,651
    
    
    
    5,241,356
    
    
    
    5,241,356
    
    
    
    5,241,356Cash dividends declared per share
of common stock
    
    $
    (0.04
    )
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 8




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##### Table of Contents



Reorganized Company
    
    Predecessor CompanyFour
    
    EightYear
    
    Months
    
    MonthsEnded
    
    Ended
    
    Ended
    
    Years Ended December 31,December 31,
    
    December 31,
    
    August 31,2003
    
    2002
    
    2002
    
    2001
    
    2000
    
    1999(dollars in thousands)Other Financial Data:Depreciation and amortization
    
    $
    70,512
    
    
    $
    18,011
    
    
    $
    35,721
    
    
    $
    54,024
    
    
    $
    54,900
    
    
    $
    51,942Capital expenditures
    
    
    119,115
    
    
    
    28,666
    
    
    
    42,654
    
    
    
    41,952
    
    
    
    39,805
    
    
    
    53,963Balance Sheet Data(at end of period):Accounts receivable
    
    $
    36,674
    
    
    $
    42,070
    
    
    
    
    
    
    $
    43,182
    
    
    $
    55,818
    
    
    $
    53,556Inventories
    
    
    136,784
    
    
    
    102,149
    
    
    
    
    
    
    
    105,573
    
    
    
    125,521
    
    
    
    106,977Total assets
    
    
    706,544
    
    
    
    556,397
    
    
    
    
    
    
    
    530,584
    
    
    
    620,807
    
    
    
    613,037Total long-term debt, including capital
leases
    
    
    431,776
    
    
    
    298,801
    
    
    
    
    
    
    
    259,435
    
    
    
    269,279
    
    
    
    253,132Redeemable preferred stock (4)
    
    
    
    
    
    
    78,022
    
    
    
    
    
    
    
    82,026
    
    
    
    76,428
    
    
    
    70,830Total stockholders equity (deficit) (4)
    
    
    95,563
    
    
    
    1,499
    
    
    
    
    
    
    
    (124,041
    )
    
    
    (4,626
    )
    
    
    46,187
   (1)
    
    The Company recorded a net gain for restructuring of $395 for the eight
months ended August 31, 2002. The significant components of this net gain
included: professional fees of $10,068; direct costs of the restructuring,
net of $8,344; savings attributable to the retiree benefit plan
modification of ($24,432); and a consent fee of $5,625 to the holders of
the First Mortgage Notes.(2)
    
    For the year ended December 31 2001, represents the write-off of a
receivable from Consumers Packaging Inc. (Consumers) and affiliates of
$18,221 and the write-off of an advance to G&G Investments, Inc. of
$17,447. For the year ended December 31, 1999, represents the Companys
allocable portion of the write-off of costs relating to a software system.(3)
    
    Reorganization items, net consist of a net gain for fresh start
adjustments of $49,908 and expenses incurred in the Chapter 11 proceedings
of $2,519, comprised of: $2,450 of debtor-in-possession facility fees;
$1,687 of professional fees; $1,276 of deferred financing fees written off
relating to the Senior Notes; and a credit of $2,894 for the reversal of
interest expense relating to the Senior Notes.(4)
    
    In 2003, Anchor consummated an initial public offering of 8,625,000 shares of its common stock (which includes 1,125,000 additional shares of
common stock to cover over-allotment of shares) (the Equity Offering).
The Company received net proceeds from the Equity Offering of $127.7
million. Approximately $85.3 million of the net proceeds of the Equity
Offering were used to redeem all of the Series C Preferred Stock. A
portion of the redemption price was paid through the issuance of 2,382,348 shares of common stock (valued at $38.1 million based on the initial
public offering price of $16.00 per share). 9




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##### Table of Contents



ITEM 7. Managements Discussion and Analysis of Financial Condition and Results of Operations. Overview 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. Initial Public Offering On September 30, 2003, the Company consummated an initial public offering
of 7,500,000 shares of its common stock, par value $.10 per share, at the
initial public offering price of $16.00 per share. On October 8, 2003, the
underwriters for the Equity Offering exercised an option to purchase 1,125,000
additional shares of common stock to cover over-allotment of shares in
connection with the Equity Offering. The Company received net proceeds from the
Equity Offering of $127.7 million (including proceeds of $16.8 million from the
exercise of the over-allotment option). $85.3 million of the net proceeds of the Equity Offering were used to
redeem all of the Series C Preferred Stock. The redemption price of the Series
C Preferred Stock was equal to the sum of (i) $1,000 per share ($75.0 million)
plus all accrued and unpaid dividends computed to the date of redemption ($10.3
million) and (ii) 15% of the fair market value of all of the outstanding shares
of common stock. The portion of the redemption price specified in clause (ii)
of the preceding sentence was paid through the issuance of 2,382,348 shares of
common stock (valued at $38.1 million based on the initial public offering
price of $16.00 per share). The remainder of the net proceeds were used to fund
working capital and for general corporate purposes. Pending application of
these net proceeds, advances outstanding under Anchors $100.0 million
revolving credit facility (the Revolving Credit Facility) were paid down and
the excess funds were invested in short-term U.S. government securities. Senior Secured Notes Offering On February 7, 2003, the Company completed an offering of $300.0 million
aggregate principal amount of 11% Senior Secured Notes due 2013, issued under
the Indenture. The Senior Secured Notes are senior secured obligations of the
Company, ranking equal in right of payment with all existing and future
unsubordinated indebtedness of the Company and senior in right of payment to
all future subordinated indebtedness of the Company. The Senior Secured Notes
are secured by a first priority lien, subject to certain permitted
encumbrances, on substantially all of Anchors existing real property,
equipment and other fixed assets relating to Anchors nine operating glass
container manufacturing facilities. The collateral does not include inventory,
accounts receivable or intangible assets. Proceeds from the issuance of the Senior Secured Notes, net of fees, were
$289.0 million and were used to repay the principal amount outstanding under
the First Mortgage Notes plus accrued interest thereon ($156.3 million in
total), the principal amount outstanding under the $20.0 million term loan
facility from Ableco Finance LLC (the Term Loan) plus accrued interest
thereon and a prepayment fee ($20.4 million in total) and advances then
outstanding under the Revolving Credit Facility ($66.9 million in total), which
included funds for certain of the Companys capital improvement projects.
During the first quarter of 2003, the remaining proceeds of $45.0 million were
used to terminate certain equipment leases by purchasing from the respective
lessors the equipment leased thereunder. The Company entered into a Registration Rights Agreement on February 7,
2003, under which the Company registered with the Securities and Exchange
Commission (the SEC) new Senior Secured Notes, having substantially identical
terms as the Senior Secured Notes. On August 5, 2003, the Company completed an
exchange offer with respect to $298.8 million of Senior Secured Notes tendered
in the exchange offer, for a like principal 10




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amount of new Senior Secured Notes, identical in all material respects to
the Senior Secured Notes, except that the new Senior Secured Notes do not bear
legends restricting the transfer thereof. On August 5, 2003, the Company completed an additional offering of the
Additional Notes. Proceeds from the issuance of the Additional Notes, net of
fees, were $53.4 million. The Additional Notes were issued at an issue price of
107.5% of their principal amount. The Additional Notes were issued under the
same Indenture as the Senior Secured Notes, as supplemented by a first
supplemental indenture, dated August 5, 2003, and their terms are identical in
all material respects to the Senior Secured Notes. 100% of the net proceeds from the issuance of the Additional Notes were
used to finance improvements to the collateral securing the Senior Secured
Notes and the Additional Notes in compliance with the Indenture. Pending
application of such proceeds, a portion of the net proceeds were used to pay
down advances outstanding under the Revolving Credit Facility of $49.7 million. The Company entered into a Registration Rights Agreement on August 5, 2003
with respect to the Additional Notes under which the Company registered with
the SEC new Additional Notes, having substantially identical terms as the
Additional Notes. On January 29, 2004, the Company completed an exchange offer
with respect to $50.0 million of Additional Notes tendered in the exchange
offer, for a like principal amount of new Additional Notes, identical in all
material respects to the Additional Notes, except that the new Additional Notes
do not bear legends restricting the transfer thereof. Reorganization On August 30, 2002, Anchor consummated a significant restructuring of its
existing debt and equity securities through a Chapter 11 Reorganization. As
part of this Reorganization, Cerberus, through certain Cerberus-affiliated
funds and managed accounts, invested $80.0 million of new equity capital into
Anchor, acquiring 100% of Anchors Series C Preferred Stock for $75.0 million
and 100% of Anchors common stock for $5.0 million. In addition, Anchor
arranged for a $20.0 million Term Loan from Ableco Finance LLC. In connection
with the Reorganization, Anchor also put in place a new $100.0 million
Revolving Credit Facility. In addition, Anchor settled various lawsuits,
eliminated certain related party claims and contracts and entered into the PBGC
Agreement. The Term Loan was subsequently repaid with a portion of the proceeds
from the offering of the Senior Secured Notes. The Series C Preferred Stock was
redeemed in full with a portion of the proceeds of the Equity Offering. The Reorganization was consummated on August 30, 2002; however, for
accounting purposes, the Company has accounted for the Reorganization and fresh
start adjustments as of August 31, 2002, to coincide with its normal financial
closing for the month of August. The Companys financial statements as of and
for periods subsequent to August 31, 2002 are referred to as the Reorganized
Company statements. All financial statements prior to that date are referred
to as the Predecessor Company statements. The financial statements for the
eight months ended August 31, 2002 give effect to the restructuring and
reorganization adjustments and the implementation of fresh start accounting. Results of Operations Historical results for the year ended December 31, 2002 contain two
different bases of accounting and, consequently, after giving effect to the
Reorganization and fresh start adjustments, the historical financial statements
of the Reorganized Company are not comparable to those of the Predecessor
Company and have been separately disclosed. Fourth Quarter 2003 Compared to Fourth Quarter 2002 The Companys sales growth in the fourth quarter continued the positive
trend experienced in the third quarter of 2003. Unit shipments increased 9.3%
in the fourth quarter 2003 compared to the fourth quarter 2002. The overall
increase in unit shipments for the glass container industry during the
comparable period was 1%. The Companys volume growth in the fourth quarter of
2003 was primarily driven by strong shipments in the beer category.
Improvements in volume and price/mix changes contributed to income from
operations. Net sales for the three months ended December 31, 2003 were $167.1
million compared to net sales of $156.9 million for the three months ended
December 31, 2002, an increase in net sales of $10.2 million, or 6.5%. 11




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Income from operations declined $8.0 million in the fourth quarter 2003
compared to the fourth quarter 2002. The increase in noncash depreciation and
amortization represented $5.4 million of this amount. Expenses for natural gas,
the principal fuel for manufacturing glass, increased $2.9 million (1.7% of net
sales), as compared with 2002. During the fourth quarter, Anchor finished three
renovation projects, including two furnaces at its Salem, New Jersey facility
and one furnace at its Lawrenceburg, Indiana facility. Anchor has continued to
realize productivity improvements at its manufacturing facilities, including
improvements from the furnace rebuilds at the Henryetta, Oklahoma and Warner
Robins, Georgia facilities completed earlier in 2003. These productivity
improvements were more than offset by the downtime costs associated with the
fourth quarter projects, contributing $2.6 million to the decline in income
from operations. The decline in income from operations is partially offset by
reduced operating lease expense of $3.6 million in the fourth quarter of 2003,
as a result of the buyout of certain equipment leases. Interest expense increased $3.9 million in the fourth quarter 2003
compared to the fourth quarter 2002. Interest expense related to the Senior
Secured Notes (principal amount of $350.0 million) in the fourth quarter of
2003 was $4.6 million more than interest expense related to the First Mortgage
Notes (principal amount of $150.0 million) and Term Loan (principal amount of
$20.0 million) in the comparable period of 2002, partially offset by lower
average interest rates and lower average borrowings outstanding under the
Companys Revolving Credit Facility. Year Ended December 31, 2003 Compared to the Four Months Ended December 31, 2002 and Eight Months Ended August 31, 2002
 Net sales.Net sales for 2003 were $709.9 million compared to net sales of
$715.6 million for the periods comprising 2002, a decrease in net sales of $5.7
million, or less than one percent. Unit shipments declined slightly by 1.3%,
year over year, as compared to the decline of 2.9% in glass container industry
shipments. The strength of Anchors volume shipments in the second half of 2003
was not enough to fully offset the decline experienced in the first half of
2003. The Company believes that the negative impact on sales in the early
months of 2003 was due to the softness in the economy, the effect of the
military action against Iraq and the harsh weather conditions experienced
during the winter and spring in certain parts of the United States. Cost of products sold.The Companys cost of products sold for 2003 was
$660.5 million, or 93.0% of net sales, while the cost of products sold for the
periods comprising 2002 was $644.1 million, or 90.0% of net sales. This decline
in margin in 2003 principally was due to the increase in the cost of natural
gas, the principal fuel for manufacturing glass, of $18.0 million (2.5% of net
sales), as compared with the periods comprising the year ended 2002. In
addition, margin was negatively impacted by noncash cost increases in 2003 for
depreciation and amortization of $16.8 million (2.4% of net sales). The Company
also incurred costs associated with downtime during the capital improvement
projects at four of the Companys facilities during 2003. These costs were
partially offset by additional manufacturing efficiencies due to the Companys
cost reduction efforts and due to the completed improvement projects at Elmira,
New York, Henryetta, Oklahoma and Warner Robins, Georgia, and by reduced
operating lease expense of $9.9 million in 2003 as a result of the buyout of
certain equipment leases. Selling and administrative expenses.Selling and administrative expenses
for the year ended December 31, 2003 were $26.9 million, or 3.8% of net sales,
while selling and administrative expenses for the periods comprising the year
ended December 31, 2002 were $28.9 million, or 4.0% of net sales. The year to
date decline in selling and administrative expenses resulted from lower
personnel and benefit costs incurred and lower professional fees in 2003 as
compared to 2002. Restructuring, net and Reorganization items, net.On August 30, 2002, the
effective date of the Plan, the Company adopted fresh start reporting pursuant
to the American Institute of Certified Public Accountants Statement of Position
90-7 Financial Reporting by Entities in Reorganization Under the Bankruptcy
Code. The adoption of fresh start reporting results in the Company revaluing
its balance sheet to fair value based on the reorganization value of the
Company. Reorganization costs for the eight months ended August 31, 2002
consisted of a net gain for fresh start adjustments of $49.9 million and
expenses incurred in the Chapter 11 proceedings of $2.5 million. On August 30, 2002, the Company recorded a net gain for restructuring of
$0.4 million during the eight months ended August 31, 2002. The significant
components of this net gain include: professional fees$10.1 million; direct
costs of the restructuring$7.9 million; First Mortgage Note holder consent
fee$5.6 million; 12




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##### Table of Contents



monetization of assets$4.5 million; other fees$3.9 million; net cost of
derivative settlement$0.2 million; retiree benefit plan modification($24.4
million); and adjustment to pension liabilities($8.2 million). No comparable expenses were incurred in 2003. Approximately $1.0 million
of legal fees, related to the Restructuring, were recorded against
restructuring related reserves in 2003. Interest expense.Interest expense for 2003 was $48.5 million compared to
$28.3 million for the periods comprising 2002, an increase of $20.2 million.
Interest expense related to the Senior Secured Notes (principal amount of
$350.0 million) in 2003 was $16.4 million more than interest expense related to
the First Mortgage Notes (principal amount of $150.0 million) in 2002. A
noncash write-off of $3.6 million, for deferred fees related to debt repaid
with the proceeds from the issuance of the Senior Secured Notes, together with
payments of $0.3 million for the Term Loan prepayment penalty and $0.4 million
for the consent fee paid to the First Mortgage Note holders, were included in
interest expense in 2003, totaling $4.3 million. Under the PBGC Agreement,
interest incurred in 2003 was $3.6 million greater than in 2002, during which
interest was incurred for only the four months following the Reorganization.
Interest expense in 2002, not recurring in 2003, included a $1.6 million
accrual of interest on the Senior Notes, which were repaid on August 30, 2002,
and the related unpaid interest was reversed through a credit to reorganization
items, net in August 2002. The overall increase in interest expense was also
partially offset by lower average interest rates and lower average borrowings
outstanding under the Companys Revolving Credit Facility in 2003. Net income (loss).The Company recorded a net loss of $26.1 million for
2003 compared to net income of $63.2 million in the periods comprising 2002.
The restructuring and reorganization items in the periods comprising 2002 were
$47.8 million, leaving income of $15.4 million attributable to all other
operations. The decline in earnings year over year of $41.5 million was primarily due to:  
    
    higher cost of natural gas  $18.0 million;
    
    higher interest expense  $20.2 million (including $3.6 million of noncash write-off of deferred fees);
    
    higher noncash depreciation and amortization expense  $16.8 million;
    
    other net factors, higher expense  $0.8 million; and offset by the positive effects of:  
    
    lower operating lease expenses  $9.9 million; and
    
    improved sales price and mix  $4.4 million. Four Months Ended December 31, 2002 and Eight Months Ended August 31, 2002 Compared to Year Ended December 31, 2001
 Net sales.Net sales for the four months ended December 31, 2002 were
$211.4 million and net sales for the eight months August 31, 2002 were $504.2
million, compared to $702.2 million in the year ended December 31, 2001. The
increase in net sales of $13.4 million was principally a result of general
price increases and a shift in product mix from food and beverages to
beer/flavored alcoholic beverages. Net sales and sales volume in 2002 were
negatively impacted by unplanned downtime due to emergency furnace repairs at
two of the Companys operating facilities, which resulted in lower shipment
volume in September 2002. These repairs were completed in September 2002 and
the furnaces are currently operating. Cost of products sold.Cost of products sold in the four months ended
December 31, 2002 was $192.4 million, or 91.0% of net sales, and cost of
products sold in the eight months ended August 31, 2002 was $451.6 million, or
89.6% of net sales, while the cost of products sold for the year ended December
31, 2001 was $658.6 million, or 93.8% of net sales. This improvement in margin
in 2002 principally reflects the decline in the cost of natural gas, the
principal fuel for manufacturing glass, of $14.0 million. The decline in the
price of natural gas in 2002, as compared with 2001, resulted in net margin
improvement of $3.8 million, net of the energy price recovery program.
Additional manufacturing efficiencies, due to the Companys cost reduction
efforts, and lower inventory storage costs, resulting from the lower levels of
inventory, also favorably impacted cost of products sold. These improvements
were partially offset by increases in other costs, such as insurance, fringe
benefits and costs associated with downtime during the modernization project at
the Elmira, New York facility. In addition, the furnace disruption discussed
above resulted in extra costs incurred in the four months ended December 31,
2002 of $1.8 million. With 13




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##### Table of Contents



the implementation of SFAS 142, effective as of January 1, 2002, goodwill
is no longer amortized. Goodwill amortization expense was $3.0 million in the
year ended December 31, 2001. Selling and administrative expenses.Selling and administrative expenses
for the four months ended December 31, 2002 were $9.7 million, or 4.6% of net
sales, selling and administrative expenses for the eight months ended August
31, 2002 were $19.3 million, or 3.8% of net sales, while selling and
administrative expenses for the year ended December 31, 2001 were $28.5
million, or 4.0% of net sales. Restructuring, net and Reorganization items, net. Reorganization costs
for the eight months ended August 31, 2002 consisted of a net gain for fresh
start adjustments of $49.9 million and expenses incurred in the Chapter 11
proceedings of $2.5 million. On August 30, 2002, the Company completed the Reorganization and recorded
a net gain for restructuring of $0.4 million during the eight months ended
August 31, 2002. The significant components of this net gain include:
professional fees  $10.1 million; direct costs of the restructuring  $7.9
million; First Mortgage Note holder consent fee  $5.6 million; monetization of
assets  $4.5 million; other fees  $3.9 million; net cost of derivative
settlement  $0.2 million; retiree benefit plan modification  ($24.4 million);
and adjustment to pension liabilities  ($8.2 million). Interest expense.Interest expense for the four months ended December 31,
2002 was $10.4 million and interest expense for the eight months ended August
31, 2002 was $17.9 million, compared to $30.6 million for the year ended
December 31, 2001, a decrease of $2.3 million. There was no accrual of interest
on the Senior Notes from April 15, 2002, the petition date, through August 30,
2002, the date of the repayment of the principal amount of the Senior Notes.
Interest expense on the Senior Notes was accrued for the full year of 2001
compared to an accrual of three and one-half months for 2002, resulting in a
year over year reduction of $3.5 million in interest expense. Interest expense
was also reduced due to lower average interest rates and lower average
borrowings outstanding under the Companys revolving credit facilities in 2002,
offset by interest expense related to the PBGC Agreement and the Term Loan. Net income (loss).The Company recorded a net loss of $0.6 million and net
income of $63.8 million in the four months ended December 31, 2002 and the
eight months ended August 31, 2002, respectively. The restructuring and
reorganization items were $47.8 million, leaving income of $15.4 million
attributable to all other operations. The Company recorded a net loss of $51.1
million in the year ended December 31, 2001. The related party provision and
charges were $35.7 million, leaving a loss of $15.4 million in 2001
attributable to all other operations. The improvement in earnings results for
2002 was due to general price increases, increased sales volume and a favorable
mix of business opportunities. Liquidity and Capital Resources The Companys principal sources of liquidity are funds derived from
operations and borrowings under 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 $25.2 million in cash
in 2003 compared to $75.6 million in cash in the periods comprising 2002. This
decrease in cash provided reflects the decline in earnings and changes in
working capital items. Inventory levels increased in 2003, using $34.6 million
in cash. As a result of higher natural gas prices, net cash outlays for natural
gas purchases in 2003 increased $18.0 million as compared to the periods
comprising 2002. Cash interest payments in 2003 were $10.0 million over
payments in 2002. Cash used in the reduction of current liabilities was $7.0
million. Accounts receivable levels declined in 2003, providing cash of $8.0
million. Investing Activities.Cash consumed in investing activities was $147.0
million in 2003, as compared to $67.6 million in the periods comprising 2002.
Capital expenditures were $119.1 million and $71.3 million, respectively in
2003 and 2002. The Company has recently finished three renovation projects,
including two furnaces 14




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##### Table of Contents



at its Salem, New Jersey facility and one furnace at its
Lawrenceberg, Indiana facility to expand and improve overall productive
capacity. Significant projects in 2003 include:  
    
    in the fourth quarter of 2003, a $10.0 million project at the
Salem, New Jersey facility, including the renovation of two furnaces;
    
    in the fourth quarter of 2003, a $8.0 million project at the Lawrenceburg Indiana facility;
    
    in the third quarter of 2003, a $27.5 million project at the Warner Robins, Georgia facility; and
    
    in the first quarter of 2003, a $28.0 million project at the Henryetta, Oklahoma facility. 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 by purchasing from the respective lessors the equipment leased
thereunder (of which $39.2 million is included in investing activities and $5.5
million is included in financing activities). In addition, the Company financed
$10.0 million of equipment under its master lease agreement. Financing Activities.Net cash provided in financing activities was $144.5
million in 2003, as compared to cash used of $8.0 million in the periods
comprising 2002. The net financing activities in 2003 principally reflect the
net proceeds of the Equity Offering of $127.7 million and the use of a portion
of such proceeds for the cash redemption of the Series C Preferred Stock of
$85.3 million, the proceeds of the offering of the Additional Notes of $53.4
million and 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 the
First Mortgage Notes and the Term Loan. The initial cash dividend payment on
the Companys common stock was approximately $1.0 million, paid in the fourth
quarter of 2003. On August 30, 2002, pursuant to the PBGC Agreement, Anchor granted the
PBGC a warrant for the purchase of 711,000 shares of its common stock. In June
2003, the Company repurchased all of the outstanding warrants held by the PBGC
for a negotiated price of $1.5 million. Debt and Other Contractual Obligations The Company has aggregate indebtedness of $350.0 million under the Senior
Secured Notes. See   Overview  Senior Secured Notes Offering. As of December 31, 2003, there were no advances outstanding under the
Revolving Credit Facility, borrowing availability was $73.8 million and
outstanding letters of credit on this facility were $7.6 million. Due in part
to seasonal demands on working capital and the higher levels of capital
spending in the latter part of 2003, availability under the Revolving Credit
Facility approximates $50.0 million currently. Under a master lease agreement entered into in December 2002, the Company
leased equipment in the amount of $20.0 million in the aggregate. The Company
financed $10.0 million of equipment in December 2002 and an additional $10.0
million of equipment in March 2003, each 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 the Reorganization, the Company entered
into a ten-year payment obligation under the PBGC Agreement. The Company is
required to make monthly payments to the PBGC in the amount of approximately
$0.8 million. The present value of this obligation was $60.6 million at
December 31, 2003. The 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. 15




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##### Table of Contents



Commitments for the principal payments and interest required on long-term
debt, including capital leases and certain other contractual obligations, are
as follows: Less than 1
    
    1  3
    
    3  5
    
    More than 5year
    
    years
    
    years
    
    years
    
    Total(dollars in thousands)Long-term debt
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    350,000
    
    
    $
    350,000Capital leases
    
    
    4,100
    
    
    
    8,210
    
    
    
    5,240
    
    
    
    
    
    
    
    17,550Interest on above obligations
    
    
    39,525
    
    
    
    78,297
    
    
    
    77,231
    
    
    
    173,250
    
    
    
    368,303Payments under the PBGC
Agreement
    
    
    10,000
    
    
    
    20,000
    
    
    
    20,000
    
    
    
    37,500
    
    
    
    87,500Operating leases
    
    
    5,400
    
    
    
    8,440
    
    
    
    5,610
    
    
    
    8,340
    
    
    
    27,790$
    59,025
    
    
    $
    114,947
    
    
    $
    108,081
    
    
    $
    569,090
    
    
    $
    851,143
 In addition to the above, the Company is obligated to pay approximately
$3.5 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 $119.1 million in 2003. Of this total spending,
$73.5 million relates to the five furnace rebuilds and renovations at four of
the Companys manufacturing facilities. The significant capital expenditures in
2003 were incurred to provide increased productivity and improved efficiency.
Capital spending in 2004 is expected to return to more normal levels and is
expected to approximate $55.0 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 2001 and 2002, primarily due to the abnormally high
energy costs experienced in 2001. 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. 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. Critical Accounting Policies and Estimates The Companys significant accounting policies are disclosed in Note 1 and
other notes to the annual financial statements included herein. The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from estimates. 16




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##### Table of Contents



The most significant accounting estimates inherent in the preparation of
the Companys financial statements form the basis for costs and reserves with
respect to areas such as property, plant and equipment, post-retirement
benefits, environmental reserves, insurance reserves and valuation allowances
to reduce deferred tax assets. Estimates and judgments are based on historical
experience and other factors believed to be reasonable in the circumstances.
Management continually reviews its accounting policies for application and
disclosure in the financial statements. Property, plant and equipment Property, plant and equipment
expenditures are capitalized and recorded at cost. For financial statement
purposes, these assets are depreciated generally using the straight-line method
over the estimated useful lives of the assets. Maintenance and repairs are
charged directly to expense as incurred. The Company makes estimates regarding
the useful lives of these assets and any changes in the actual lives could
result in material changes in the net book value of these assets. The Company
evaluates the recoverability of its long-lived assets whenever adverse events
or changes in business climate indicate that the expected undiscounted future
cash flows from the related asset may be less than previously anticipated. If
the net book value of the related asset exceeds the undiscounted future cash
flows of the asset, the carrying amount would be reduced to the present value
of its expected future cash flows and an impairment loss would be recognized.
This analysis requires the Company to make significant estimates and
assumptions, and changes in facts and circumstances could result in material
changes in the carrying value of the assets and the related depreciation
expense. The Companys depreciation expense in 2003 and the four months ended
December 31, 2002 was based on the Companys fresh start appraisal from August
2002, and resulted in higher depreciation expense than normal maintenance
capital expenditure levels and industry comparables. As a result of a change in
the business conditions and outlook of Anchor, the Company engaged an
independent appraisal firm to evaluate and update the depreciable lives of its
property, plant and equipment. The Company plans to implement the results of
this independent appraisal in 2004 and anticipates a reduction of depreciation
expense in future periods following implementation. Post-retirement benefits Post-retirement benefit obligations are based
on various assumptions, including discount rate, health care cost trend rates,
retirement and mortality rates and other factors. Actual results that differ
from the assumptions affect future expenses and obligations. A one percentage
point increase in the assumed healthcare cost trend rate would increase the
accumulated post-retirement benefit obligation as of December 31, 2003 by
approximately $4.9 million and the net post-retirement healthcare cost for the
year ended December 31, 2003 by approximately $0.3 million. A one percentage
point decrease in the assumed healthcare cost trend rate would decrease the
accumulated post-retirement benefit obligation as of December 31, 2003 by
approximately $4.2 million and the net post-retirement healthcare cost for the
year ended December 31, 2003 by approximately $0.3 million. 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. Under
generally accepted accounting principles, a plan sponsor may elect to defer
recognizing the effects of the Medicare Act in the accounting for its plan
under Statement of Financial Accounting Standards No. 106  Employers
Accounting for Postretirement Benefits Other Than Pensions (SFAS 106) until
authoritative guidance on the accounting for the federal subsidy is issued. The
Company has elected to defer recognizing the effects of the Medicare Act, and
accordingly, the accumulated post-retirement benefit obligation and the net
periodic benefit cost in the accompanying financial statements and notes
thereto do not reflect the effects of the Medicare Act on the plan. Specific
guidance on the accounting for the federal subsidy is pending and upon its
issuance, such guidance could require a sponsor to change previously reported
information. Environmental reserves Reserves have been established for potential
environmental liabilities, including known or projected remediation projects
and projected exposure at third-party sites. These reserves are based on the
Companys estimates. Changes in facts and circumstances, from those upon which
the Companys estimates are based, could result in material changes to the
Companys environmental liabilities as reported. Insurance reserves These reserves are determined based upon reported
claims in process and actuarial estimates for losses incurred but not reported,
based upon the Companys claims history. A material change in actual reported
claims would likely result in material changes to the reserves as reported. 17




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##### Table of Contents



Deferred tax assets The Company uses the liability method of accounting
for income taxes. If, on the basis of available evidence, it is more likely
than not that all or a portion of the deferred tax asset will not be realized,
an assessment is made as to whether or not a valuation allowance is required to
offset deferred tax assets. Since realization is not assured as of December 31,
2003, the Company has deemed it appropriate to establish a valuation allowance
against the net deferred tax assets. This assessment includes anticipating
future taxable income and the Companys tax planning strategies and is made on
an ongoing basis. Consequently, future material changes in the valuation
allowance are possible. 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. Given these risks and uncertainties, readers are
cautioned not to place undue reliance on forward-looking statements. The
Company disclaims any obligation to update any forward looking statements. Factors Affecting Future Results The following are certain factors that could affect the future results of
the Company. They should be considered in connection with evaluating
forward-looking statements contained in the Annual Report on Form 10-K because
these factors could cause actual results and conditions to differ materially
from those projected in forward-looking statements. Anheuser-Busch is Anchors largest customer; the loss of Anheuser-Busch as a
customer would adversely impact Anchors operating performance. The Companys largest customer, Anheuser-Busch, accounted for
approximately 53.3% of its net sales for the year ended December 31, 2003. The
Company has two dedicated facilities in Florida and Georgia that provide two
Anheuser-Busch breweries with glass containers. The contract covering these
facilities extends through 2005. The loss of Anheuser-Busch as a customer or a
material reduction in Anheuser-Buschs bottle requirements or a modification in
pricing terms would adversely impact the Companys operating performance,
results of operations and cash flows. 18




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##### Table of Contents



In addition to Anheuser-Busch, Anchors customers are concentrated; the failure
to maintain its relationships with its largest customers would adversely affect
its operating performance. The Companys ten largest customers accounted for approximately 78.1% of
its net sales for the year ended December 31, 2003. The Company did not have
any written agreements with six of its twenty-five largest customers for 2003
(comprising 6.8% of net sales for 2003). In addition, agreements with another
six of its twenty-five largest customers for 2003 (comprising 6.6% of net sales
for 2003) will expire during 2004. The loss of a number of these customers, a
significant reduction in sales to these customers or a significant change in
the commercial terms of the Companys relationship with these customers could
have a material adverse effect on the Companys business, financial condition
and results of operations. Anchor faces significant competition from other glass container producers, as
well as from makers of alternative forms of packaging, and its products are
subject to consumer taste. The Companys principal competitors are Owens-Illinois and Saint-Gobain.
These competitors are larger and have greater financial and other resources
than the Company. If the Company is unable to continue to compete successfully
with these competitors, its operating performance could be adversely affected. In addition to competing directly with Owens-Illinois and Saint-Gobain in
the glass container segment of the rigid packaging industry, the Company also
competes indirectly with manufacturers of other forms of rigid packaging, such
as aluminum cans and plastic containers. These other forms of rigid packaging
compete with glass containers principally on the basis of quality, price,
availability and consumer preference. The Company believes that the use of
glass containers for alcoholic and non-alcoholic beverages is subject to
consumer taste. The Companys products may not continue to be preferred by its
customers end-users and consumer preference may shift from glass containers to
non-glass containers. A material shift in consumer preference away from glass
containers, or competitive pressures from the Companys direct and indirect
competitors, could result in a decline in sales volume or pricing pressure and,
as a result, its operating performance could be adversely affected. If Anchor is unable to obtain its raw materials at favorable prices, it could
adversely impact operating performance. Sand, soda ash, limestone, cullet, corrugated packaging materials and
energy, primarily natural gas, are the principal raw materials that are used in
the Companys manufacturing operations. The Company believes that adequate
quantities of these materials are, and will continue to be, available from
various suppliers. However, if temporary shortages due to disruptions in supply
caused by weather, transportation, production delays or other factors require
the Company to secure its raw materials from sources other than its current
suppliers, the Company cannot be assured that it will be able to do so on terms
as favorable as its current terms or at all. In addition, material increases in
the cost of any of these items on an industry-wide basis could have a material
adverse effect on the Companys business, financial condition and results of
operations if it is unable to pass these cost increases along to its customers. Natural gas, the principal fuel used to manufacture Anchors products, is
subject to widely fluctuating prices. 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
Company incurred higher costs for natural gas of $18.0 million in 2003 as
compared to 2002. The natural gas price for March 2004 closed at $5.150 per
MMBTU. Certain of the Companys contracts with its customers incorporate price
adjustments based on changes in the cost of natural gas, although the change in
pricing may lag behind the cost incurred to obtain natural gas. The Company has
no way of predicting to what extent natural gas prices will rise in the future.
Any significant increase, or the inability to pass on those costs, could
adversely impact the Companys margins and operating performance and would have
a material adverse effect on the Companys results of operations and financial
condition. 19




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##### Table of Contents



Anchor is involved in a continuous manufacturing process with a high degree of
fixed costs. Any interruption in the operations of its manufacturing facilities
may impact its operating performance. Due to the extreme operating conditions inherent in some of the Companys
manufacturing processes, it, from time to time, may incur unplanned business
interruptions and such interruptions may adversely impact its operating
performance and, as a result, the Company may not generate sufficient cash flow
to satisfy its obligations. To the extent that the Company experiences any
furnace breakdowns or similar manufacturing problems, it will be required to
make capital expenditures and its liquidity may be impaired as a result of
these expenditures. Anchor is subject to various regulations that could impose substantial costs
upon the Company and may adversely impact its operating performance. The Companys operations are subject to Federal, state and local laws and
regulations that are designed to protect the environment, as well as the safety
and health of workers. See Item 1. Business  Environmental and Other
Governmental Regulations for a discussion of certain of these laws and
regulations. Such laws and regulations frequently change and state and local
laws are different in every jurisdiction. The Companys operations and
properties must comply with these legal requirements. In addition, the Company
is required to obtain and maintain permits in connection with the Companys
glass-making operations. The Company has incurred, and expects to continue to
incur, costs for the Companys operations to comply with such legal
requirements, and these costs could increase in the future. Many such legal
requirements provide for substantial fines, orders (including orders to cease
operations) and criminal sanctions for violations. Certain environmental legal
requirements provide for strict, and under certain circumstances, joint and
several liability for investigation and remediation of releases of hazardous
substances into the environment and liability for related damages to natural
resources. They may also impose liability for personal injury or property
damage due to the presence of, or exposure to, hazardous substances. It is
difficult to predict the future development of such laws and regulations or
their impact on the Companys business or results of operations. Anchor
anticipates that standards under these types of laws and regulations will
continue to tighten and that compliance will require increased capital and
other expenditures. A significant order or judgment against Anchor, the loss of
a significant permit or license or the imposition of a significant fine or any
other liability in excess of, or not covered by, the Companys reserves and/or
the Companys insurance could adversely impact the Companys operating
performance. Over the years, legislation has been introduced at the Federal, state and
local levels requiring a deposit or tax, or imposing other restrictions, on the
sale or use of certain containers, particularly beer and carbonated soft drink
containers. Several states have enacted some form of deposit legislation, and
others may in the future. The enactment of additional deposit laws or laws,
such as mandatory recycling rate requirements, that affect the cost structure
of a particular segment or all of the packaging industry could have a material
adverse effect on the Companys business, results of operations and financial
condition. Organized strikes or work stoppages by unionized employees may have an adverse
effect on the Companys operating performance. The Companys two labor contracts with the Glass Molders, Pottery,
Plastics and Allied Workers and its two labor contracts with the American Flint
Glass Workers Union expire on March 31, 2005 and August 31, 2005, respectively.
If the Companys unionized employees were to engage in a strike or other work
stoppage prior to such contract expiration, or if the Company would be unable
to negotiate acceptable extensions of those agreements with labor unions
resulting in a strike or other work stoppage by the affected workers, the
Company could experience a significant disruption of operations and increased
operating costs as a result of higher wages or benefits paid to union members,
which could have an adverse impact on the Companys operating performance. Anchor may be unable to purchase the Senior Secured Notes upon a change of
control. Upon the occurrence of specified change of control events, Anchor will
be required to offer to purchase the Senior Secured Notes. Anchor may not have
sufficient financial resources to purchase all of the Senior Secured Notes that
holders tender upon a change of control offer. The Revolving Credit Facility
prohibits, and future credit agreements or other agreements relating to the
Companys senior indebtedness to which Anchor becomes a party may prohibit it
from purchasing any of the Senior Secured Notes, as a result of a change of
control. 20




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##### Table of Contents



Anchors substantial debt could limit its flexibility, adversely affecting its
financial health.  Anchor has a substantial amount of debt that could:
    
    make it difficult for it to satisfy its debt obligations;
    
    make it vulnerable to general adverse economic and industry conditions;
    
    limit its ability to obtain additional financing for working
capital, capital expenditures, raw materials, natural gas hedging,
product development efforts and other general corporate
requirements;
    
    require it to dedicate a substantial portion of its cash flow
from operations to payments on its debt, thereby reducing the
availability of cash flow for operations and other purposes;
    
    limit its flexibility in planning for, or reacting to,
changes in its business and the industry in which it operates; and
    
    place it at a competitive disadvantage compared to
competitors that may have proportionately less debt. In addition, the Companys ability to make scheduled payments or refinance
its obligations depends on its successful financial and operating performance.
Operating performance may not be able to generate sufficient cash flow, or
capital resources may not be sufficient to permit payment of debt obligations
in the future. The Companys financial and operating performance, cash flow and
capital resources depend upon prevailing economic conditions and certain
financial, business and other factors, many of which are beyond its control. Anchors controlling stockholders may take actions that conflict with the
interests of other security holders. In excess of a majority of the voting power of Anchors capital stock is
held by affiliates of Cerberus, referred to herein as the majority
stockholders. Accordingly, Cerberus controls the power to elect the Companys
directors, to appoint members of management and to approve all actions
requiring the approval of the holders of the Companys common stock, including
adopting amendments to its certificate of incorporation and approving mergers,
certain acquisitions or sales of all or substantially all of its assets. The
interests of the majority stockholders could conflict with interests other
security holders. Anchors business may suffer if it does not retain its senior management. The Company depends on its senior management. The loss of services of any
of the members of its senior management team could adversely affect its
business until a suitable replacement can be found. There may be a limited
number of persons with the requisite skills to serve in these positions and the
Company may be unable to locate or employ such qualified personnel on
acceptable terms. New Accounting Standards In December 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. 46 revised  Consolidation of Variable Interest Entities
(FIN 46), which replaces FASB Interpretation No. 46, issued January 2003. The
primary objectives of FIN 46 are to provide guidance on how to identify
entities for which control is achieved through means other than through voting
rights. The adoption of this interpretation did not impact the Companys
financial position or results of operations. In January 2003, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 150  Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity (SFAS 150),
effective for financial instruments entered into or modified after May 31,
2003, and otherwise effective at the beginning of the first interim period
beginning after June 15, 2003. SFAS 150 establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics of
both liabilities and equity. The adoption of SFAS 150 did not impact the
Companys financial position or results of operations. In December 2003, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 132 R  Employers Disclosures
about Pensions and Other Postretirement Benefits (SFAS 132R), effective for
financial statements with fiscal years ending after December 15, 2003 for
certain disclosures and requires interim-period disclosures effective for
interim periods beginning after December 15, 2003. SFAS 132R requires
additional disclosures to those in the original SFAS 132 about the assets,
obligations, cash flows and net 21




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##### Table of Contents



periodic benefit cost of defined benefit pension plans and other defined
benefit postretirement plans. The Company adopted the disclosure requirements
of SFAS 132R. 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 January
2004, the Financial Accounting Standards Board issued FSP No. FAS 106-1 -
Accounting and Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003 (FSP FAS 106-1). Under FSP
FAS 106-1, a plan sponsor may elect to defer recognizing the effects of the
Medicare Act in the accounting for its plan under SFAS 106 and in providing
disclosures related to the plan required by SFAS 132R until authoritative
guidance on the accounting for the federal subsidy is issued. The Company has
elected to defer recognizing the effects of the Medicare Act, and accordingly,
the accumulated post-retirement benefit obligation and the net periodic benefit
cost in the accompanying financial statements and notes thereto do not reflect
the effects of the Medicare Act on the plan. Specific guidance on the
accounting for the federal subsidy is pending and upon its issuance, such
guidance could require a sponsor to change previously reported information. 
 ITEM 7A. 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. The applicable margin was fixed through February 2003, and thereafter
became a fixed spread based on the Companys level of excess availability. A
change in interest rates under the Revolving Credit Facility could adversely
impact results of operations. A 10 percent fluctuation in the market rate of
interest would impact annual interest expense by approximately $0.2 million,
based on average borrowings outstanding during 2003. 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. 22




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##### Table of Contents



ITEM 8. Financial Statements and Supplementary Data. PageReports of Independent Certified Public Accountants
    
    F-2Statements of Operations and Comprehensive Income (Loss) 
Year Ended December 31, 2003,
Four Months Ended December 31, 2002 (Reorganized Company),
Eight Months Ended August 31, 2002 and
Year Ended December 31, 2001 (Predecessor Company)
    
    F-4Balance Sheets 
December 31, 2003 and 2002 (Reorganized Company)
    
    F-5Statements of Cash Flows 
Year Ended December 31, 2003,
Four Months Ended December 31, 2002 (Reorganized Company),
Eight Months Ended August 31, 2002 and
Year Ended December 31, 2001 (Predecessor Company)
    
    F-6Statements of Stockholders Equity (Deficit) 
Year Ended December 31, 2003,
Four Months Ended December 31, 2002 (Reorganized Company),
Eight Months Ended August 31, 2002 and
Year Ended December 31, 2001 (Predecessor Company)
    
    F-8Notes to Financial Statements
    
    F-10
 
 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. 
 ITEM 9A. Controls and Procedures. An evaluation was carried out, as of the end of the period covered by this
report on Form 10-K, 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 (the Exchange Act).
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. 23




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##### Table of Contents



PART III 
 ITEM 10. Directors and Executive Officers of the Registrant. Directors and Executive Officers of the Company Information regarding Directors of the Company is incorporated by
reference from the definitive Proxy Statement under the heading Proposal 1.
Election of Directors. Executive Officers.The following table sets forth certain information
regarding each of the Companys executive officers. Name
    
    Age
    
    PositionRichard M. Deneau
    
    
    57
    
    
    President and Chief Executive Officer and
DirectorDarrin J. Campbell
    
    
    39
    
    
    Chief Financial Officer and Executive Vice
President - Sales and Asset ManagementRoger L. Erb
    
    
    61
    
    
    Executive Vice President - Operations and
EngineeringRichard A. Kabaker
    
    
    60
    
    
    Vice President, General Counsel and Secretary
 Executive Officers Terms of Office.Each officer serves at the discretion
of the Board and until such officers successor is chosen and qualified. Richard M. Deneauassumed his duties as the Companys President and Chief
Operating Officer in July 1997 and as a director in June 1998. In August 2002,
he became the Companys Chief Executive Officer. From January 1996 to June
1997, Mr. Deneau was Senior Vice President and Chief Operating Officer of
Ball-Foster Glass Container Co. From October 1992 to January 1996, he was
Senior Vice President and General Manager of Beverage Can Operations at
American National Can Company. Prior to October 1992, Mr. Deneau was Senior
Vice President of Sales at American National Can Companys Foster-Forbes Glass
Company Division, a predecessor of Ball-Foster Glass Container Co. Darrin J. Campbelljoined the Company as Vice President, Pricing and
Business Development in September 2000, became Executive Vice President 
Sales and Asset Management in September 2001 and became the Companys Chief
Financial Officer in November 2002. Mr. Campbell was Chief Operating Officer of
Pabst Brewing from May 1999 to August 2000 and Chief Financial Officer from
September 1996 to April 1999. Roger L. Erbbecame the Companys Senior Vice President-Operations in
October 1997 and Executive Vice President  Operations and Engineering in
September 2001. From September 1995 to June 1997, Mr. Erb was Senior Vice
President of Technical Services at Ball-Foster Glass Container Co. Prior
thereto, he was employed at American National Can Companys Foster-Forbes Glass
Company Division, serving as Senior Vice President of Technical Services from
June 1994 to September 1995, Senior Vice President of Operations from January
1993 to June 1994 and, prior to this time, as Vice President of Technical
Services. Richard A. Kabakerbecame the Companys Vice President and General Counsel
in December 2002 and became the Companys Secretary in January 2003. From
August 2001 to November 2002, Mr. Kabaker was in private practice. From
September 2000 to August 2001, he was Vice President, Legal Affairs and General
Counsel of Rexam Beverage Can Company, the successor company to American
National Can Company. From 1996 to 2000, he served as Vice President, Legal
Affairs of American National Can Company. Prior thereto, he held various
positions in the law department of American National Can Company and its
predecessor companies. 24




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##### Table of Contents



Code of Ethics The Company has adopted a code of ethics that applies to its principal
executive, financial and accounting officers, and people performing similar
functions, as well as to other employees of the Company. A copy of the code of
ethics has been filed as an exhibit to this Annual Report on Form 10-K. A copy
of Anchors code of ethics may be obtained, without charge, by shareholders
upon written request to the Secretary at the Companys corporate office. 
 ITEM 11. Executive Compensation. Information required by Item 11 is incorporated by reference from the
definitive Proxy Statement under the heading Executive Compensation. 
 ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Information required by Item 12 is incorporated by reference from the
definitive Proxy Statement under the heading Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters. 
 ITEM 13. Certain Relationships and Related Transactions. Information required by Item 13 is incorporated by reference from the
definitive Proxy Statement under the heading Certain Relationships and Related
Transactions. 
 ITEM 14. Principal Accountant Fees and Services. Information required by Item 14 is incorporated by reference from the
definitive Proxy Statement under the heading Audit Fees. 25




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##### Table of Contents



PART IV 
 ITEM 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.  (a)
    
    Financial Statements, Schedules and Exhibits  1.
    
    Financial Statements.The Financial Statements of Anchor
Glass Container Corporation and the Reports of Independent Certified
Public Accountants are included beginning at page F-1 of this Annual
Report on Form 10-K. See the index included on page 23.2.
    
    Financial Statement Schedules.The following Financial
Statement Schedule is filed as part of this Annual Report on Form
10-K and should be read in conjunction with the Financial Statements
of Anchor Glass Container Corporation. SCHEDULE II ANCHOR GLASS CONTAINER CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
YEAR ENDED DECEMBER 31, 2003,
FOUR MONTHS ENDED DECEMBER 31, 2002,
EIGHT MONTHS ENDED AUGUST 31, 2002 AND
YEAR ENDED DECEMBER 31, 2001
(dollars in thousands) AdditionsBalance at
    
    Charged to
    
    Charged
    
    
    
    
    
    Balance atbeginning
    
    costs and
    
    to other
    
    
    
    
    
    end ofDescription
    
    of period
    
    expenses
    
    accounts
    
    Deductions
    
    periodYear ended December 31, 2003Allowance for doubtful accounts
    
    $
    561
    
    
    $
    (373
    )
    
    $
    
    
    
    $
    (62
    )(A)
    
    $
    250Four months ended December 31, 2002Allowance for doubtful accounts
    
    
    645
    
    
    
    
    
    
    
    
    
    
    
    84
    (A)
    
    
    561Eight months ended August 31, 2002Allowance for doubtful accounts
    
    
    1,000
    
    
    
    (75
    )
    
    
    (285
    )
    
    
    (5
    )(A)
    
    
    645Year ended December 31, 2001Allowance for doubtful accounts
    
    
    1,100
    
    
    
    
    
    
    
    
    
    
    
    100
    (A)
    
    
    1,000
   (A)
    
    Accounts written off, net 26




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##### Table of Contents



3.
    
    Exhibits. ExhibitNumber
    
    Item3.1
    
    Amended and Restated Certificate of Incorporation of Anchor
    
    (A)3.2
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation of
Anchor
    
    (A)3.3
    
    Amended and Restated By-Laws of Anchor
    
    (A)3.4
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation of
Anchor
    
    (A)3.5
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation of
Anchor
    
    (B)3.6
    
    Certificate of Elimination of the Series C Participating Preferred Stock of Anchor
    
    (B)4.1
    
    Stockholders Agreement, dated August 30, 2002, by and among Anchor, the
Investors and the Other Stockholders
    
    (A)4.2
    
    Indenture dated as of February 7, 2003 among Anchor, as Issuer and The Bank of
New York, as Trustee
    
    (C)4.3
    
    First Supplemental Indenture dated as of August 5, 2003, between Anchor, as
Issuer, and the Bank of New York, as Trustee
    
    (D)4.4
    
    Collateral Access and Intercreditor Agreement, dated February 7, 2003, by and
among Congress Financial Corporation (Central), in its capacity as collateral
agent, and The Bank of New York, in its capacity as trustee and collateral agent
    
    (C)4.5
    
    Registration Rights Agreement, dated August 5, 2003, among Anchor and the Initial
Purchasers
    
    (D)10.1
    
    Southeast Glass Bottle Supply Agreement between Anheuser-Busch, Incorporated and
Anchor
    
    (E)10.2
    
    Glass Bottle Agreement between Anheuser-Busch, Incorporated and Anchor
    
    (F)10.3
    
    Limited License Agreement, dated March 8, 2002 between Owens Brockway Glass
Container Inc. and Anchor
    
    (A)10.4
    
    Loan and Security Agreement by and among Anchor, as Borrower, and Congress
Financial Corporation (Central), as Administrative and Collateral Agent, Bank of
America, N.A., as Documentation Agent, and the Financial Institutions Named
Therein, as Lenders, dated August 30, 2002
    
    (A)10.5
    
    Term Loan Agreement by and among Anchor, as Borrower, the financial institutions
from time to time party thereto, as Lenders, and Ableco Finance LLC, as Agent,
dated August 30, 2002
    
    (A)10.6
    
    Security Agreement, made by Anchor in favor of Ableco Finance LLC, dated August
30, 2002
    
    (A)10.7
    
    Collateral Agency and Intercreditor Agreement dated August 30, 2002 between
Congress Financial Corporation (Central) and Ableco Finance, LLC
    
    (A)10.8
    
    Amendment No. 1 to Loan and Security Agreement by and among Anchor, as Borrower,
the financial institutions from time to time parties to the Loan Agreement, as
Lenders, and Congress Financial Corporation (Central), as Agent, dated December
31, 2002
    
    (C)10.9
    
    Amendment No. 2 to Loan and Security Agreement by and among Anchor, as Borrower,
and Congress Financial Corporation (Central), as Agent for the financial
institutions from time to time parties to the Loan Agreement, as Lenders, dated
February 7, 2003
    
    (C)10.10
    
    Amendment No. 3 to Loan and Security Agreement by and among Anchor, as Borrower,
and Congress Financial Corporation (Central), as Agent for the financial
institutions from time to time parties to the Loan Agreement, as Lenders, dated
July 25, 2003
    
    (D)10.11
    
    Termination and Release Agreement between Anchor and Ableco Finance LLC, dated
February 7, 2003
    
    (C)10.12
    
    Form of Director and Officer Indemnification Agreement
    
    (D)
 27




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##### Table of Contents



ExhibitNumber
    
    Item10.13
    
    Agreement for the Supply of Goods by and among Motts Inc., Snapple Beverage
Group, Inc. and Anchor, effective January 1, 2004
    
    (G)12.1
    
    Statement re: computation of ratio of earnings to fixed charges for the year
ended December 31, 2003, the four months ended December 31, 2002, the eight
months ended August 31, 2002 and the years ended December 31, 2001, 2000 and 1999
    
    *14.1
    
    Code of Ethics
    
    *21.1
    
    List of subsidiaries of the Company
    
    (H)31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
    
    *31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
    
    *32
    
    Section 1350 Certifications
    
    *
   *
    
    Filed herewith.
    
    Portions of this document have been omitted and filed separately with the
Commission pursuant to a request for confidential treatment in accordance
with Rule 24b-2 of the Exchange Act.(A)
    
    Previously filed as an exhibit to the Companys Quarterly Report on Form
10-Q for the quarter ended September 30, 2002 and incorporated herein by
reference.(B)
    
    Previously filed on November 3, 2003 as an exhibit to the Companys
Registration Statement on Form S-4 (Reg. No. 333-110205) originally filed
with the Securities and Exchange Commission on November 3, 2003 and
incorporated herein by reference.(C)
    
    Previously filed as an exhibit to the Companys Annual Report on Form
10-K for the year ended December 31, 2002 and incorporated herein by
reference.(D)
    
    Previously filed on September 5, 2003 as an exhibit to the Companys
Registration Statement on Form S-1 (Reg. No. 333-108209) originally filed
with the Securities and Exchange Commission on August 26, 2003 and
incorporated herein by reference.(E)
    
    Previously filed as an exhibit to the Companys Quarterly Report on Form
10-Q for the quarter ended June 30, 1999 and incorporated herein by
reference.(F)
    
    Previously filed as an exhibit to the Companys Annual Report on Form
10-K/A Amendment No. 1 for the year ended December 31, 2002, filed on June
20, 2003 and incorporated herein by reference.(G)
    
    Previously filed as an exhibit to the Companys Registration Statement on
Form S-4 Amendment No. 1 (Reg. No. 333-110205) filed with the Securities
and Exchange Commission on December 19, 2003 and incorporated herein by
reference.(H)
    
    Previously filed as an exhibit to the Companys Registration Statement on
Form S-4 (Reg. No. 333-31363) originally filed with the Securities and
Exchange Commission on July 16, 1997 and incorporated herein by reference.  (b)
    
    Reports on Form 8-KCurrent Report on Form 8-K dated and filed November 3, 2003 pursuant to
Items 7 and 12. A press release regarding the release of the Companys
results of operations for the third quarter and nine months ended
September 30, 2003 is furnished as an exhibit. 28




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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION INDEX TO FINANCIAL STATEMENTS PageReports of Independent Certified Public Accountants
    
    F-2Statements
of Operations and Comprehensive Income (Loss) 
Year Ended December 31, 2003,
Four Months Ended December 31, 2002 (Reorganized Company),
Eight Months Ended August 31, 2002 and
Year Ended December 31, 2001 (Predecessor Company)
    
    F-4Balance Sheets 
December 31, 2003 and 2002 (Reorganized Company)
    
    F-5Statements of Cash Flows 
Year Ended December 31, 2003,
Four Months Ended December 31, 2002 (Reorganized Company),
Eight Months Ended August 31, 2002 and
Year Ended December 31, 2001 (Predecessor Company)
    
    F-6Statements of Stockholders Equity (Deficit) 
Year Ended December 31, 2003,
Four Months Ended December 31, 2002 (Reorganized Company),
Eight Months Ended August 31, 2002 and
Year Ended December 31, 2001 (Predecessor Company)
    
    F-8Notes to Financial Statements
    
    F-10
 F-1




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##### Table of Contents






Report of Independent Certified Public Accountants

To the Board of Directors and Stockholders of Anchor Glass Container
Corporation:

In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the results of operations and cash
flows of Anchor Glass Container Corporation for the eight-month period ended
August 31, 2002 and the year ended December 31, 2001 in conformity with
accounting principles generally accepted in the United States of America. In
addition, in our opinion, the financial statement schedule for the eight-month
period ended August 31, 2002 and the year ended December 31, 2001 listed in the
index appearing under Item 15(a) presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
financial statements. These financial statements and financial statement
schedule are the responsibility of the Companys management; our responsibility
is to express an opinion on these financial statements and financial statement
schedule based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

The Company plan of reorganization became effective on August 30, 2002. As
discussed in Notes 3 and 4 to the financial statements, the Company adopted
Fresh-Start Reporting principles in accordance with the American Institute of
Certified Public Accountants Statement of Position 90-7, "Financial Reporting
by Entities in Reorganization under the Bankruptcy Code."

As discussed in Note 1 to the financial statements, the Company adopted
Statement of Financial Accounting Standards (FASB Statement) No. 142, Goodwill
and Other Intangible Assets, on January 1, 2002.

PRICEWATERHOUSECOOPERS LLP

Tampa, Florida
November 22, 2002

F-2



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##### Table of Contents



Report of Independent Certified Public Accountants

To the Board of Directors and Stockholders of Anchor Glass Container
Corporation:

In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Anchor
Glass Container Corporation at December 31, 2003 and 2002, and the results of
its operations and cash flows for the year ended December 31, 2003 and the four
months ended December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America. In addition, in our
opinion, the financial statement schedule for the year ended December 31, 2003
and the four months ended December 31, 2002 listed in the index appearing under
Item 15(a) presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related financial statements. These
financial statements and financial statement schedule are the responsibility of
the Companys management; our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audit. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

The Company plan of reorganization became effective on August 30, 2002. As
discussed in Notes 3 and 4 to the financial statements, the Company adopted
Fresh-Start Reporting principles in accordance with the American Institute of
Certified Public Accountants Statement of Position 90-7, "Financial Reporting
by Entities in Reorganization under the Bankruptcy Code."

PRICEWATERHOUSECOOPERS LLP

Tampa, Florida
February 11, 2004

F-3



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

|                                                                                                               |                                      |                                      |            |                     |       |                     |            |              |     |              |            |         |     |   |           |         |         |  
|-------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ------------------------------------ | ---------- | ------------------- | ----- | ------------------- | ---------- | ------------ | --- | ------------ | ---------- | ------- | --- | - | --------- | ------- | ------- | -
|                                                                                                               |                                      |                                      |            | Reorganized Company |       | Predecessor Company
|                                                                                                               |                                      |                                      |            |                     |       |                    
|                                                                                                               |                                      |                                      |            | Year                |       | Four Months         |            | Eight Months |     | Year        
|                                                                                                               |                                      |                                      |            | Ended               |       | Ended               |            | Ended        |     | Ended       
|                                                                                                               |                                      |                                      |            | December 31,        |       | December 31,        |            | August 31,   |     | December 31,
|                                                                                                               |                                      |                                      |            | 2003                |       | 2002                |            | 2002         |     | 2001        
|                                                                                                               |                                      |                                      |            |                     |       |                     |            |              |     |             
|Net sales                                                                                                      |                                      | $                                    | 709,943    |                     |       | $                   | 211,379    |              |     | $            | 504,195    |         |     | $ | 702,209   |        
|Costs and expenses:                                                                                            |                                      |                                      |            |                     |       |                     |            |              |     |              |            |         |     |   |           |        
|                                                                                                               | Cost of products sold                |                                      |            | 660,402             |       |                     |            | 192,434      |     |              |            | 451,619 |     |   |           | 658,641 |        
|                                                                                                               | Selling and administrative expenses  |                                      |            | 26,963              |       |                     |            | 9,683        |     |              |            | 19,262  |     |   |           | 28,462  |        
|                                                                                                               | Restructuring, net                   |                                      |            |                    |       |                     |            |             |     |              |            | (395    | )   |   |           |        |        
|                                                                                                               | Related party provisions and charges |                                      |            |                    |       |                     |            |             |     |              |            |        |     |   |           | 35,668  |        
|                                                                                                               |                                      |                                      |            |                     |       |                     |            |              |     |              |            |         |     |   |           |        
|Income (loss) from operations                                                                                  |                                      |                                      | 22,578     |                     |       |                     | 9,262      |              |     |              | 33,709     |         |     |   | (20,562   | )      
|Reorganization items, net                                                                                      |                                      |                                      |           |                     |       |                     |           |              |     |              | 47,389     |         |     |   |          |        
|Other income (expense), net                                                                                    |                                      |                                      | (156       | )                   |       |                     | 450        |              |     |              | 673        |         |     |   | 106       |        
|Interest expense (eight months ended
August 31, 2002 contractual interest of
$19,800)                          |                                      |                                      | (48,549    | )                   |       |                     | (10,381    | )            |     |              | (17,948    | )       |     |   | (30,612   | )      
|                                                                                                               |                                      |                                      |            |                     |       |                     |            |              |     |              |            |         |     |   |           |        
|Net income (loss)                                                                                              |                                      | $                                    | (26,127    | )                   |       | $                   | (669       | )            |     | $            | 63,823     |         |     | $ | (51,068   | )      
|                                                                                                               |                                      |                                      |            |                     |       |                     |            |              |     |              |            |         |     |   |           |        
|Series C preferred stock dividends                                                                             |                                      | $                                    | (7,263     | )                   |       | $                   | (3,022     | )            |     |              |            |         |     |   |           |        
|                                                                                                               |                                      |                                      |            |                     |       |                     |            |              |     |              |            |         |     |   |           |        
|Excess fair value of consideration
transferred over carrying value of Series C preferred stock upon redemption |                                      | $                                    | (38,118    | )                   |       | $                   |           |              |     |              |            |         |     |   |           |         |        
|                                                                                                               |                                      |                                      |            |                     |       |                     |            |              |     |              |            |         |     |   |           |        
|Series A and B preferred stock dividends
(eight months ended August 31, 2002
contractual dividends of $9,371)  |                                      |                                      |            |                     |       |                     |            |              |     | $            | (4,100     | )       |     | $ | (14,057   | )      
|                                                                                                               |                                      |                                      |            |                     |       |                     |            |              |     |              |            |         |     |   |           |        
|Income (loss) applicable to common stock                                                                       |                                      | $                                    | (71,508    | )                   |       | $                   | (3,691     | )            |     | $            | 59,723     |         |     | $ | (65,125   | )      
|                                                                                                               |                                      |                                      |            |                     |       |                     |            |              |     |              |            |         |     |   |           |        
|Basic net income (loss) per share
applicable to common stock                                                   |                                      | $                                    | (4.37      | )                   |       | $                   | (0.27      | )            |     | $            | 11.37      |         |     | $ | (12.40    | )      
|                                                                                                               |                                      |                                      |            |                     |       |                     |            |              |     |              |            |         |     |   |           |        
|Basic weighted average number of common
shares outstanding                                                     |                                      |                                      | 16,364,196 |                     |       |                     | 13,499,995 |              |     |              | 5,251,356  |         |     |   | 5,251,356 |        
|                                                                                                               |                                      |                                      |            |                     |       |                     |            |              |     |              |            |         |     |   |           |        
|Diluted net income (loss) per share
applicable to common stock                                                 |                                      | $                                    | (4.37      | )                   |       | $                   | (0.27      | )            |     | $            | 1.89       |         |     | $ | (12.40    | )      
|                                                                                                               |                                      |                                      |            |                     |       |                     |            |              |     |              |            |         |     |   |           |        
|Diluted weighted average number of common
shares outstanding                                                   |                                      |                                      | 16,364,196 |                     |       |                     | 13,449,995 |              |     |              | 33,805,651 |         |     |   | 5,251,356 |        
|                                                                                                               |                                      |                                      |            |                     |       |                     |            |              |     |              |            |         |     |   |           |        
|Comprehensive income (loss):                                                                                   |                                      |                                      |            |                     |       |                     |            |              |     |              |            |         |     |   |           |        
|                                                                                                               | Net income (loss)                    |                                      | $          | (26,127             | )     |                     | $          | (669         | )   |              | $          | 63,823  |     |   | $         | (51,068 | )      
|                                                                                                               | Other comprehensive income (loss):   |                                      |            |                     |       |                     |            |              |     |              |            |         |     |   |           |         |        
|                                                                                                               |                                      | Derivative income (loss)             |            |                     | 1,954 |                     |            |              | 190 |              |            |         | 531 |   |           |         | (531    | )
|                                                                                                               |                                      | Minimum pension liability adjustment |            |                     |      |                     |            |              |    |              |            |         |    |   |           |         | (62,468 | )
|                                                                                                               |                                      |                                      |            |                     |       |                     |            |              |     |              |            |         |     |   |           |        
|Comprehensive income (loss)                                                                                    |                                      | $                                    | (24,173    | )                   |       | $                   | (479       | )            |     | $            | 64,354     |         |     | $ | (114,067  | )      
|                                                                                                               |                                      |                                      |            |                     |       |                     |            |              |     |              |            |         |     |   |           |        

See Notes to Financial Statements.

F-4



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##### Table of Contents






ANCHOR GLASS CONTAINER CORPORATION
BALANCE SHEETS
(dollars in thousands, except per share data)

|                                                                                                                                                                |                                                                                                                                   |                                                |                           |         |                     |         |         |        |         |         | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | ------------------------- | ------- | ------------------- | ------- | ------- | ------ | ------- | ------- | 
|                                                                                                                                                                |                                                                                                                                   |                                                |                           |         | Reorganized Company
|                                                                                                                                                                |                                                                                                                                   |                                                |                           |         | December 31,       
|                                                                                                                                                                |                                                                                                                                   |                                                |                           |         |                    
|                                                                                                                                                                |                                                                                                                                   |                                                |                           |         | 2003                |         | 2002   
|                                                                                                                                                                |                                                                                                                                   |                                                |                           |         |                     |         |        
|Assets                                                                                                                                                          |                                                                                                                                   |                                                |                           |         |                     |         |         |       
|Current assets:                                                                                                                                                 |                                                                                                                                   |                                                |                           |         |                     |         |         |       
|Cash and cash equivalents                                                                                                                                       |                                                                                                                                   | $                                              | 23,083                    |         |                     | $       | 351     |       
|Restricted cash                                                                                                                                                 |                                                                                                                                   |                                                |                          |         |                     |         | 4,387   |       
|Accounts receivable, less allowance for doubtful accounts of
$250 and $561, respectively                                                                        |                                                                                                                                   |                                                | 36,674                    |         |                     |         | 42,070  |       
|Inventories                                                                                                                                                     |                                                                                                                                   |                                                | 136,784                   |         |                     |         | 102,149 |       
|Other current assets                                                                                                                                            |                                                                                                                                   |                                                | 11,230                    |         |                     |         | 8,603   |       
|                                                                                                                                                                |                                                                                                                                   |                                                |                           |         |                     |         |         |       
|                                                                                                                                                                |                                                                                                                                   |                                                | Total current assets      |         |                     | 207,771 |         |        |         | 157,560 | 
|                                                                                                                                                                |                                                                                                                                   |                                                |                           |         |                     |         |         |       
|Property, plant and equipment:                                                                                                                                  |                                                                                                                                   |                                                |                           |         |                     |         |         |       
|                                                                                                                                                                |                                                                                                                                   | Land and land improvements                     |                           |         | 11,760              |         |         |        | 11,694  |        
|                                                                                                                                                                |                                                                                                                                   | Buildings                                      |                           |         | 69,474              |         |         |        | 67,004  |        
|                                                                                                                                                                |                                                                                                                                   | Machinery, equipment and molds                 |                           |         | 479,850             |         |         |        | 322,565 |        
|                                                                                                                                                                |                                                                                                                                   | Less accumulated depreciation and amortization |                           |         | (83,831             | )       |         |        | (16,877 | )      
|                                                                                                                                                                |                                                                                                                                   |                                                |                           |         |                     |         |         |       
|                                                                                                                                                                |                                                                                                                                   |                                                | 477,253                   |         |                     |         | 384,386 |       
|Other assets                                                                                                                                                    |                                                                                                                                   |                                                | 14,674                    |         |                     |         | 6,815   |       
|Intangible assets                                                                                                                                               |                                                                                                                                   |                                                | 6,846                     |         |                     |         | 7,636   |       
|                                                                                                                                                                |                                                                                                                                   |                                                |                           |         |                     |         |         |       
|                                                                                                                                                                |                                                                                                                                   | $                                              | 706,544                   |         |                     | $       | 556,397 |       
|                                                                                                                                                                |                                                                                                                                   |                                                |                           |         |                     |         |         |       
|Liabilities and Stockholders Equity                                                                                                                            |                                                                                                                                   |                                                |                           |         |                     |         |         |       
|Current liabilities:                                                                                                                                            |                                                                                                                                   |                                                |                           |         |                     |         |         |       
|Borrowings under revolving credit facility                                                                                                                      |                                                                                                                                   | $                                              |                          |         |                     | $       | 47,413  |       
|Current maturities of long-term debt                                                                                                                            |                                                                                                                                   |                                                | 8,895                     |         |                     |         | 8,315   |       
|Accounts payable                                                                                                                                                |                                                                                                                                   |                                                | 55,000                    |         |                     |         | 46,969  |       
|Accrued expenses                                                                                                                                                |                                                                                                                                   |                                                | 17,004                    |         |                     |         | 35,314  |       
|Accrued interest                                                                                                                                                |                                                                                                                                   |                                                | 14,900                    |         |                     |         | 5,167   |       
|Accrued compensation and employee benefits                                                                                                                      |                                                                                                                                   |                                                | 31,271                    |         |                     |         | 26,331  |       
|                                                                                                                                                                |                                                                                                                                   |                                                |                           |         |                     |         |         |       
|                                                                                                                                                                |                                                                                                                                   |                                                | Total current liabilities |         |                     | 127,070 |         |        |         | 169,509 | 
|                                                                                                                                                                |                                                                                                                                   |                                                |                           |         |                     |         |         |       
|Long-term debt                                                                                                                                                  |                                                                                                                                   |                                                | 422,881                   |         |                     |         | 243,073 |       
|Long-term post-retirement liabilities                                                                                                                           |                                                                                                                                   |                                                | 40,197                    |         |                     |         | 40,342  |       
|Other long-term liabilities                                                                                                                                     |                                                                                                                                   |                                                | 20,833                    |         |                     |         | 23,952  |       
|                                                                                                                                                                |                                                                                                                                   |                                                |                           |         |                     |         |         |       
|                                                                                                                                                                |                                                                                                                                   |                                                | 483,911                   |         |                     |         | 307,367 |       
|Commitments and contingencies                                                                                                                                   |                                                                                                                                   |                                                |                           |         |                     |         |         |       
|Redeemable preferred stock, Series C, $.01 par value; (2002
- 100,000 shares authorized; 75,000 shares issued and
outstanding; $78,022 liquidation preference ) |                                                                                                                                   |                                                |                          |         |                     |         | 78,022  |       
|                                                                                                                                                                |                                                                                                                                   |                                                |                           |         |                     |         |         |       
|Stockholders equity (deficit):                                                                                                                                 |                                                                                                                                   |                                                |                           |         |                     |         |         |       
|                                                                                                                                                                | Common stock, $.10 par value; 60,000,000 shares
authorized; shares issued and outstanding 24,507,343 
2003 and 13,499,995 - 2002 |                                                |                           | 2,451   |                     |         |         | 1,350  |        
|                                                                                                                                                                | Capital in excess of par value                                                                                                    |                                                |                           | 129,549 |                     |         |         | 3,650  |        
|                                                                                                                                                                | Accumulated deficit                                                                                                               |                                                |                           | (38,581 | )                   |         |         | (3,691 | )      
|                                                                                                                                                                | Accumulated other comprehensive income (loss)-Derivatives                                                                         |                                                |                           | 2,144   |                     |         |         | 190    |        
|                                                                                                                                                                |                                                                                                                                   |                                                |                           |         |                     |         |         |       
|                                                                                                                                                                |                                                                                                                                   |                                                | 95,563                    |         |                     |         | 1,499   |       
|                                                                                                                                                                |                                                                                                                                   |                                                |                           |         |                     |         |         |       
|                                                                                                                                                                |                                                                                                                                   | $                                              | 706,544                   |         |                     | $       | 556,397 |       
|                                                                                                                                                                |                                                                                                                                   |                                                |                           |         |                     |         |         |       

See Notes to Financial Statements.

F-5



---



##### Table of Contents






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

|                                                                             |                                                                                          |                                                             |          |                     |          |                     |         |              |         |              |         |   |         |   |         |   |         |  
|---------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------- | ----------------------------------------------------------- | -------- | ------------------- | -------- | ------------------- | ------- | ------------ | ------- | ------------ | ------- | - | ------- | - | ------- | - | ------- | -
|                                                                             |                                                                                          |                                                             |          | Reorganized Company |          | Predecessor Company
|                                                                             |                                                                                          |                                                             |          |                     |          |                    
|                                                                             |                                                                                          |                                                             |          | Year                |          | Four Months         |         | Eight Months |         | Year        
|                                                                             |                                                                                          |                                                             |          | Ended               |          | Ended               |         | Ended        |         | Ended       
|                                                                             |                                                                                          |                                                             |          | December 31,        |          | December 31,        |         | August 31,   |         | December 31,
|                                                                             |                                                                                          |                                                             |          | 2003                |          | 2002                |         | 2002         |         | 2001        
|                                                                             |                                                                                          |                                                             |          |                     |          |                     |         |              |         |             
|Cash flows from operating activities:                                        |                                                                                          |                                                             |          |                     |          |                     |         |              |         |              |         |   |         |   |         |  
|Net income (loss)                                                            |                                                                                          | $                                                           | (26,127  | )                   |          | $                   | (669    | )            |         | $            | 63,823  |   |         | $ | (51,068 | )
|                                                                             | Adjustments to reconcile net income (loss) to net
cash provided by operating activities: |                                                             |          |                     |          |                     |         |              |         |              |         |   |         |   |         |   |        
|                                                                             |                                                                                          | Depreciation and amortization of property and
equipment     |          |                     | 66,632   |                     |         |              | 17,003  |              |         |   | 33,952  |   |         |   | 48,443  |  
|                                                                             |                                                                                          | Other amortization                                          |          |                     | 3,880    |                     |         |              | 1,008   |              |         |   | 1,769   |   |         |   | 5,581   |  
|                                                                             |                                                                                          | Write-off and amortization of financing fees                |          |                     | 5,273    |                     |         |              | 623     |              |         |   | 1,609   |   |         |   | 2,389   |  
|                                                                             |                                                                                          | Loss (gain) on sale of property and equipment               |          |                     | 379      |                     |         |              | (7      | )            |         |   | 90      |   |         |   | (495    | )
|                                                                             |                                                                                          | Other                                                       |          |                     | (1,207   | )                   |         |              | (125    | )            |         |   | (329    | ) |         |   | (118    | )
|                                                                             |                                                                                          | Restructuring and reorganization payments                   |          |                     |         |                     |         |              | (3,644  | )            |         |   | (4,835  | ) |         |   |        |  
|                                                                             |                                                                                          | Restructuring, net                                          |          |                     |         |                     |         |              |        |              |         |   | (395    | ) |         |   |        |  
|                                                                             |                                                                                          | Reorganization items, net                                   |          |                     |         |                     |         |              |        |              |         |   | (47,389 | ) |         |   |        |  
|                                                                             |                                                                                          | Related party provisions and charges                        |          |                     |         |                     |         |              |        |              |         |   |        |   |         |   | 35,668  |  
|Increase (decrease) in cash resulting from changes
in assets and liabilities |                                                                                          |                                                             | (23,657  | )                   |          |                     | 6,792   |              |         |              | 6,280   |   |         |   | (3,999  | )
|                                                                             |                                                                                          |                                                             |          |                     |          |                     |         |              |         |              |         |   |         |   |         |  
|                                                                             |                                                                                          |                                                             | 25,173   |                     |          |                     | 20,981  |              |         |              | 54,575  |   |         |   | 36,401  |  
|                                                                             |                                                                                          |                                                             |          |                     |          |                     |         |              |         |              |         |   |         |   |         |  
|Cash flows from investing activities:                                        |                                                                                          |                                                             |          |                     |          |                     |         |              |         |              |         |   |         |   |         |  
|                                                                             |                                                                                          | Expenditures for property, plant and equipment              |          |                     | (119,115 | )                   |         |              | (28,666 | )            |         |   | (42,654 | ) |         |   | (41,952 | )
|                                                                             |                                                                                          | Purchase of equipment under leases                          |          |                     | (39,217  | )                   |         |              |        |              |         |   |        |   |         |   |        |  
|                                                                             |                                                                                          | Proceeds from sale of property and equipment                |          |                     | 10,747   |                     |         |              | 10,026  |              |         |   | 47      |   |         |   | 14,812  |  
|                                                                             |                                                                                          | Deposit of sale proceeds into escrow account                |          |                     | (10,000  | )                   |         |              | (10,000 | )            |         |   |        |   |         |   | (13,379 | )
|                                                                             |                                                                                          | Withdrawal of funds from escrow account                     |          |                     | 10,000   |                     |         |              | 10,000  |              |         |   |        |   |         |   | 13,348  |  
|                                                                             |                                                                                          | Change in restricted cash                                   |          |                     | 4,387    |                     |         |              | 1,548   |              |         |   | (5,935  | ) |         |   |        |  
|                                                                             |                                                                                          | Payments for strategic alliances with customers             |          |                     |         |                     |         |              |        |              |         |   | (1,266  | ) |         |   | (1,824  | )
|                                                                             |                                                                                          | Other                                                       |          |                     | (3,748   | )                   |         |              | (996    | )            |         |   | 265     |   |         |   | (1,879  | )
|                                                                             |                                                                                          |                                                             |          |                     |          |                     |         |              |         |              |         |   |         |   |         |  
|                                                                             |                                                                                          |                                                             | (146,946 | )                   |          |                     | (18,088 | )            |         |              | (49,543 | ) |         |   | (30,874 | )
|                                                                             |                                                                                          |                                                             |          |                     |          |                     |         |              |         |              |         |   |         |   |         |  
|Cash flows from financing activities:                                        |                                                                                          |                                                             |          |                     |          |                     |         |              |         |              |         |   |         |   |         |  
|                                                                             |                                                                                          | Proceeds from issuance of long-term debt                    |          |                     | 353,750  |                     |         |              |        |              |         |   | 20,000  |   |         |   |        |  
|                                                                             |                                                                                          | Principal payments of long-term debt                        |          |                     | (178,493 | )                   |         |              | (1,774  | )            |         |   | (51,416 | ) |         |   | (1,937  | )
|                                                                             |                                                                                          | Proceeds from issuance of common stock                      |          |                     | 127,726  |                     |         |              |        |              |         |   | 5,000   |   |         |   |        |  
|                                                                             |                                                                                          | Proceeds from issuance of preferred stock                   |          |                     |         |                     |         |              |        |              |         |   | 75,000  |   |         |   |        |  
|                                                                             |                                                                                          | Redemption of Series C preferred stock, including
dividends |          |                     | (85,285  | )                   |         |              |        |              |         |   |        |   |         |   |        |  
|                                                                             |                                                                                          | Payment of capital lease obligations for assets
purchased   |          |                     | (5,539   | )                   |         |              |        |              |         |   |        |   |         |   |        |  
|                                                                             |                                                                                          | Repurchase of warrants                                      |          |                     | (1,500   | )                   |         |              |         |              |         |   |         |   |         |   |         |  
|                                                                             |                                                                                          | Dividends paid on common stock                              |          |                     | (980     | )                   |         |              |         |              |         |   |         |   |         |   |         |  
|                                                                             |                                                                                          | Plan distributions to Series A preferred stock              |          |                     | (3,705   | )                   |         |              | (17,409 | )            |         |   |        |   |         |   |        |  
|                                                                             |                                                                                          | Restructuring and reorganization payments                   |          |                     |         |                     |         |              | (1,056  | )            |         |   | (10,727 | ) |         |   |        |  
|                                                                             |                                                                                          | Initial payment made under the PBGC Agreement               |          |                     |         |                     |         |              |        |              |         |   | (20,750 | ) |         |   |        |  
|                                                                             |                                                                                          | Net draws (repayments) on Revolving Credit Facility         |          |                     | (47,413  | )                   |         |              | 15,817  |              |         |   | 31,596  |   |         |   |        |  
|                                                                             |                                                                                          | Net repayments on prior revolving credit facilities         |          |                     |         |                     |         |              |        |              |         |   | (50,981 | ) |         |   | (7,976  | )
|                                                                             |                                                                                          | Other, primarily financing fees                             |          |                     | (14,056  | )                   |         |              | 1,571   |              |         |   | (2,861  | ) |         |   | 270     |  
|                                                                             |                                                                                          |                                                             |          |                     |          |                     |         |              |         |              |         |   |         |   |         |  
|                                                                             |                                                                                          |                                                             | 144,505  |                     |          |                     | (2,851  | )            |         |              | (5,139  | ) |         |   | (9,643  | )
|                                                                             |                                                                                          |                                                             |          |                     |          |                     |         |              |         |              |         |   |         |   |         |  
|Cash and cash equivalents:                                                   |                                                                                          |                                                             |          |                     |          |                     |         |              |         |              |         |   |         |   |         |  
|                                                                             |                                                                                          | Increase (decrease) in cash and cash equivalents            |          |                     | 22,732   |                     |         |              | 42      |              |         |   | (107    | ) |         |   | (4,116  | )
|                                                                             |                                                                                          | Balance, beginning of period                                |          |                     | 351      |                     |         |              | 309     |              |         |   | 416     |   |         |   | 4,532   |  
|                                                                             |                                                                                          |                                                             |          |                     |          |                     |         |              |         |              |         |   |         |   |         |  
|                                                                             |                                                                                          | Balance, end of period                                      |          | $                   | 23,083   |                     |         | $            | 351     |              |         | $ | 309     |   |         | $ | 416     |  
|                                                                             |                                                                                          |                                                             |          |                     |          |                     |         |              |         |              |         |   |         |   |         |  

See Notes to Financial Statements.

F-6



---



##### Table of Contents



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

|                                                  |                                                                               |                                                                  |         |                     |         |                     |       |              |         |              |       |   |        |   |        |   |         |  
|------------------------------------------------- | ----------------------------------------------------------------------------- | ---------------------------------------------------------------- | ------- | ------------------- | ------- | ------------------- | ----- | ------------ | ------- | ------------ | ----- | - | ------ | - | ------ | - | ------- | -
|                                                  |                                                                               |                                                                  |         | Reorganized Company |         | Predecessor Company
|                                                  |                                                                               |                                                                  |         |                     |         |                    
|                                                  |                                                                               |                                                                  |         | Year                |         | Four Months         |       | Eight Months |         | Year        
|                                                  |                                                                               |                                                                  |         | Ended               |         | Ended               |       | Ended        |         | Ended       
|                                                  |                                                                               |                                                                  |         | December 31,        |         | December 31,        |       | August 31,   |         | December 31,
|                                                  |                                                                               |                                                                  |         | 2003                |         | 2002                |       | 2002         |         | 2001        
|                                                  |                                                                               |                                                                  |         |                     |         |                     |       |              |         |             
|Supplemental disclosure of cash flow information: |                                                                               |                                                                  |         |                     |         |                     |       |              |         |              |       |   |        |   |        |  
|                                                  | Cash paid during the period for:                                              |                                                                  |         |                     |         |                     |       |              |         |              |       |   |        |   |        |   |        
|                                                  |                                                                               | Interest                                                         |         | $                   | 33,708  |                     |       | $            | 11,638  |              |       | $ | 12,081 |   |        | $ | 28,223  |  
|                                                  |                                                                               |                                                                  |         |                     |         |                     |       |              |         |              |       |   |        |   |        |   |         |  
|                                                  | Increase (decrease) in cash resulting from
changes in assets and liabilities: |                                                                  |         |                     |         |                     |       |              |         |              |       |   |        |   |        |   |        
|                                                  |                                                                               | Accounts receivable                                              |         | $                   | 8,003   |                     |       | $            | 5,976   |              |       | $ | (2,342 | ) |        | $ | (7,525  | )
|                                                  |                                                                               | Inventories                                                      |         |                     | (34,635 | )                   |       |              | (14,914 | )            |       |   | 18,338 |   |        |   | 19,948  |  
|                                                  |                                                                               | Other current assets                                             |         |                     | (1,616  | )                   |       |              | 1,230   |              |       |   | 533    |   |        |   | 974     |  
|                                                  |                                                                               | Accounts payable, accrued expenses and
other current liabilities |         |                     | 2,745   |                     |       |              | 9,215   |              |       |   | (5,495 | ) |        |   | (26,279 | )
|                                                  |                                                                               | Other, net                                                       |         |                     | 1,846   |                     |       |              | 5,285   |              |       |   | (4,754 | ) |        |   | 8,883   |  
|                                                  |                                                                               |                                                                  |         |                     |         |                     |       |              |         |              |       |   |        |   |        |   |         |  
|                                                  |                                                                               | $                                                                | (23,657 | )                   |         | $                   | 6,792 |              |         | $            | 6,280 |   |        | $ | (3,999 | )
|                                                  |                                                                               |                                                                  |         |                     |         |                     |       |              |         |              |       |   |        |   |        |   |         |  
|Supplemental noncash activities:                  |                                                                               |                                                                  |         |                     |         |                     |       |              |         |              |       |   |        |   |        |  
|                                                  | Non-cash redemption of Series C preferred
stock                               |                                                                  | $       | 38,118              |         |                     | $     |             |         |              | $     |  |        |   | $      |  |        
|                                                  |                                                                               |                                                                  |         |                     |         |                     |       |              |         |              |       |   |        |   |        |   |         |  
|                                                  | Non-cash equipment financing                                                  |                                                                  | $       | 10,000              |         |                     | $     | 10,000       |         |              | $     |  |        |   | $      |  |        
|                                                  |                                                                               |                                                                  |         |                     |         |                     |       |              |         |              |       |   |        |   |        |   |         |  

See Notes to Financial Statements.

F-7



---



##### Table of Contents






ANCHOR GLASS CONTAINER CORPORATION
STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
(dollars in thousands)

|                                                                      |                     |   |           |   |           |   |         |   |          |   |       |   |         |   |             |   |               |   |          |   |       |   |               |   |             |   |         |   |  |   |          |   | 
|--------------------------------------------------------------------- | ------------------- | - | --------- | - | --------- | - | ------- | - | -------- | - | ----- | - | ------- | - | ----------- | - | ------------- | - | -------- | - | ----- | - | ------------- | - | ----------- | - | ------- | - |  | - | -------- | - | 
|                                                                      |                     |   |           |   |           |   |         |   |          |   |       |   |         |   |             |   |               |   | Capital  |   |       |   |               |   | Accumulated |   | Total  
|                                                                      |                     |   | Series B  |   | Issuable  |   |         |   |          |   |       |   |         |   | in excess   |   |               |   |          |   | other |   | stockholders
|                                                                      |                     |   | preferred |   | preferred |   | Common  |   |          |   |       |   | of par  |   | Accumulated |   | comprehensive |   | equity  
|                                                                      |                     |   | stock     |   | stock     |   | stock   |   | Warrants |   | value |   | deficit |   | loss        |   | (deficit)    
|                                                                      |                     |   |           |   |           |   |         |   |          |   |       |   |         |   |             |   |              
|                                                                      | Predecessor Company |   |           |   |           |   |         |   |          |   |       |   |         |   |             |   |               |   |          |   |       |   |               |   |             |   |         |   |  |   |          |   | 
|Balance, January 1, 2001                                              |                     | $ | 34        |   |           | $ | 21,731  |   |          | $ | 216   |   |         | $ | 15,433      |   |               | $ | 98,403   |   |       | $ | (127,443      | ) |             | $ | (13,000 | ) |  | $ | (4,626   | )
|Warrants exercised                                                    |                     |   |          |   |           |   |        |   |          |   | 120   |   |         |   | (5,987      | ) |               |   | 5,867    |   |       |   |              |   |             |   |        |   |  |   |         |  
|Contribution from
shareholder related to
profit on intercompany
sales |                     |   |          |   |           |   |        |   |          |   |      |   |         |   |            |   |               |   | 250      |   |       |   |              |   |             |   |        |   |  |   | 250      |  
|Dividends accrued on
Series A preferred stock                         |                     |   |          |   |           |   |        |   |          |   |      |   |         |   |            |   |               |   |         |   |       |   | (5,598        | ) |             |   |        |   |  |   | (5,598   | )
|Net loss                                                              |                     |   |          |   |           |   |        |   |          |   |      |   |         |   |            |   |               |   |         |   |       |   | (51,068       | ) |             |   |        |   |  |   | (51,068  | )
|Derivative loss                                                       |                     |   |          |   |           |   |        |   |          |   |      |   |         |   |            |   |               |   |         |   |       |   |              |   |             |   | (531    | ) |  |   | (531     | )
|Amount related to minimum
pension liability                           |                     |   |          |   |           |   |        |   |          |   |      |   |         |   |            |   |               |   |         |   |       |   |              |   |             |   | (62,468 | ) |  |   | (62,468  | )
|                                                                      |                     |   |           |   |           |   |         |   |          |   |       |   |         |   |             |   |               |   |          |   |       |   |               |   |             |   |         |   |  |   |          |  
|                                                                      | Predecessor Company |   |           |   |           |   |         |   |          |   |       |   |         |   |             |   |               |   |          |   |       |   |               |   |             |   |         |   |  |   |          |   | 
|Balance, December 31, 2001                                            |                     |   | 34        |   |           |   | 21,731  |   |          |   | 336   |   |         |   | 9,446       |   |               |   | 104,520  |   |       |   | (184,109      | ) |             |   | (75,999 | ) |  |   | (124,041 | )
|Dividends accrued on
Series A
preferred stock                         |                     |   |          |   |           |   |        |   |          |   |      |   |         |   |            |   |               |   |         |   |       |   | (1,633        | ) |             |   |        |   |  |   | (1,633   | )
|Net income                                                            |                     |   |          |   |           |   |        |   |          |   |      |   |         |   |            |   |               |   |         |   |       |   | 63,823        |   |             |   |        |   |  |   | 63,823   |  
|Derivative income                                                     |                     |   |          |   |           |   |        |   |          |   |      |   |         |   |            |   |               |   |         |   |       |   |              |   |             |   | 531     |   |  |   | 531      |  
|Reorganization
adjustments, net                                       |                     |   | (34       | ) |           |   | (21,731 | ) |          |   | (336  | ) |         |   | (9,446      | ) |               |   | (104,520 | ) |       |   | 121,919       |   |             |   | 75,468  |   |  |   | 61,320   |  
|Issuance of 13,499,995
shares of common stock                         |                     |   |          |   |           |   |        |   |          |   | 1,350 |   |         |   |            |   |               |   | 3,650    |   |       |   |              |   |             |   |        |   |  |   | 5,000    |  
|                                                                      |                     |   |           |   |           |   |         |   |          |   |       |   |         |   |             |   |               |   |          |   |       |   |               |   |             |   |         |   |  |   |          |  
|                                                                      | Reorganized Company |   |           |   |           |   |         |   |          |   |       |   |         |   |             |   |               |   |          |   |       |   |               |   |             |   |         |   |  |   |          |   | 
|Balance, August 31, 2002                                              |                     | $ |          |   |           | $ |        |   |          | $ | 1,350 |   |         | $ |            |   |               | $ | 3,650    |   |       | $ |              |   |             | $ |        |   |  | $ | 5,000    |  
|                                                                      |                     |   |           |   |           |   |         |   |          |   |       |   |         |   |             |   |               |   |          |   |       |   |               |   |             |   |         |   |  |   |          |  

See Notes to Financial Statements.

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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
(dollars in thousands, except per share data)

|                                                                                       |                     |   |        |  |        |   |             |   |               |   |           |   |             |   |               |  |  |   |         |   | 
|-------------------------------------------------------------------------------------- | ------------------- | - | ------ |  | ------ | - | ----------- | - | ------------- | - | --------- | - | ----------- | - | ------------- |  |  | - | ------- | - | 
|                                                                                       |                     |   |        |  |        |   | Capital     |   |               |   |           |   | Accumulated |   | Total        
|                                                                                       |                     |   |        |  |        |   | in excess   |   |               |   |           |   | other       |   | stockholders
|                                                                                       |                     |   | Common |  | of par |   | Accumulated |   | comprehensive |   | equity   
|                                                                                       |                     |   | stock  |  | value  |   | deficit     |   | income (loss) |   | (deficit)
|                                                                                       |                     |   |        |  |        |   |             |   |               |   |          
|                                                                                       | Reorganized Company |   |        |  |        |   |             |   |               |   |           |   |             |   |               |  |  |   |         |   | 
|Balance, August 31, 2002                                                               |                     | $ | 1,350  |  |        | $ | 3,650       |   |               | $ |          |   |             | $ |              |  |  | $ | 5,000   |  
|Dividends accrued on
Series C preferred stock                                          |                     |   |       |  |        |   |            |   |               |   | (3,022    | ) |             |   |              |  |  |   | (3,022  | )
|Net loss                                                                               |                     |   |       |  |        |   |            |   |               |   | (669      | ) |             |   |              |  |  |   | (669    | )
|Derivative income                                                                      |                     |   |       |  |        |   |            |   |               |   |          |   |             |   | 190           |  |  |   | 190     |  
|                                                                                       |                     |   |        |  |        |   |             |   |               |   |           |   |             |   |               |  |  |   |         |  
|                                                                                       | Reorganized Company |   |        |  |        |   |             |   |               |   |           |   |             |   |               |  |  |   |         |   | 
|Balance, December 31, 2002                                                             |                     |   | 1,350  |  |        |   | 3,650       |   |               |   | (3,691    | ) |             |   | 190           |  |  |   | 1,499   |  
|Repurchase of warrants                                                                 |                     |   |       |  |        |   |            |   |               |   | (1,500    | ) |             |   |              |  |  |   | (1,500  | )
|Dividends declared on
common stock of $.04 per
share                                   |                     |   |       |  |        |   | (980        | ) |               |   |          |   |             |   |              |  |  |   | (980    | )
|Dividends accrued on
Series C preferred stock                                          |                     |   |       |  |        |   |            |   |               |   | (7,263    | ) |             |   |              |  |  |   | (7,263  | )
|Issuance of 8,625,000
shares of common stock in
the initial public
offering            |                     |   | 863    |  |        |   | 126,863     |   |               |   |          |   |             |   |              |  |  |   | 127,726 |  
|Redemption of 75,000
shares of Series C
preferred stock                                |                     |   |       |  |        |   | (38,118     | ) |               |   |          |   |             |   |              |  |  |   | (38,118 | )
|Issuance of 2,382,348
shares of common stock in
redemption of Series C
preferred stock |                     |   | 238    |  |        |   | 37,880      |   |               |   |          |   |             |   |              |  |  |   | 38,118  |  
|Net loss                                                                               |                     |   |       |  |        |   |            |   |               |   | (26,127   | ) |             |   |              |  |  |   | (26,127 | )
|Equity incentive plan                                                                  |                     |   |       |  |        |   | 254         |   |               |   |          |   |             |   |              |  |  |   | 254     |  
|Derivative income                                                                      |                     |   |       |  |        |   |            |   |               |   |          |   |             |   | 1,954         |  |  |   | 1,954   |  
|                                                                                       |                     |   |        |  |        |   |             |   |               |   |           |   |             |   |               |  |  |   |         |  
|                                                                                       | Reorganized Company |   |        |  |        |   |             |   |               |   |           |   |             |   |               |  |  |   |         |   | 
|Balance, December 31, 2003                                                             |                     | $ | 2,451  |  |        | $ | 129,549     |   |               | $ | (38,581   | ) |             | $ | 2,144         |  |  | $ | 95,563  |  
|                                                                                       |                     |   |        |  |        |   |             |   |               |   |           |   |             |   |               |  |  |   |         |  

See Notes to Financial Statements.

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##### Table of Contents






ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data)

NOTE 1  Basis of Presentation and Significant Accounting Policies

Organization of the Company

On August 30, 2002, Anchor Glass Container Corporation (the Company or
Anchor), a Delaware corporation, completed a restructuring of its existing
debt and equity securities. Certain investment funds and managed accounts
affiliated with Cerberus Capital Management, L.P. (Cerberus), acquired all of
the outstanding capital stock of Anchor through their investment in Anchor
Glass Container Holding LLC (AGC Holding), a Delaware limited liability
company formed in August 2002. On September 18, 2003, AGC Holding, the former
parent company of Anchor, was dissolved and the Anchor securities held by AGC
Holding were distributed to its members.

On September 30, 2003, the Company consummated an initial public offering
of 7,500,000 shares of its common stock, par value $.10 per share, at the
initial public offering price of $16.00 per share (the Equity Offering). On
October 8, 2003, the underwriters for the Equity Offering exercised an option
to purchase 1,125,000 additional shares of common stock to cover over-allotment
of shares in connection with the Equity Offering. The Company received net
proceeds from the Equity Offering of $127,726 (including proceeds of $16,830
from the exercise of the over-allotment option).

As of December 31, 2003, certain investment funds and managed accounts
affiliated with Cerberus own approximately 61.8% of the outstanding common
stock of Anchor.

The financial statements of the Company as of and for periods subsequent
to August 31, 2002 are referred to as the Reorganized Company statements. All
financial statements prior to that date are referred to as the Predecessor
Company statements. The financial statements for the eight months ended August
31, 2002 give effect to the restructuring and reorganization adjustments and
the implementation of fresh start accounting. The effective date of the plan of
reorganization (the Plan) was August 30, 2002 (the Effective Date);
however, for accounting purposes, the Company has accounted for the
reorganization and fresh start adjustments on August 31, 2002.

Business Segment

The Company operates as one reportable segment and is engaged in the
manufacture and sale of a diverse line of clear, amber, green and other color
glass containers of various types, designs and sizes to customers principally
in the beer, beverage, food and liquor industries. The Company markets its
products throughout the United States. The Companys international and export
sales are not significant. Sales to Anheuser-Busch Companies, Inc.
(Anheuser-Busch) represented 53.3%, 46.1%, 42.5% and 36.3%, respectively, of
net sales for the year ended December 31, 2003, the four months ended December
31, 2002, the eight months ended August 31, 2002 and the year ended December
31, 2001. The loss of Anheuser-Busch or another significant customer, unless
replaced, could have a material adverse effect on the Companys business.

Revenue Recognition

Revenues are recognized as product is shipped to customers, net of
applicable rebates and discounts. The Company may invoice customers to recover
certain cost increases, recognizing these amounts as revenue in net sales.

Cash and Cash Equivalents

The Company considers short-term investments with original maturities of
ninety days or less at the date of purchase to be cash equivalents.

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ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data)

Inventories

Inventories are stated at the lower of cost or market. The cost of
substantially all inventories of raw materials and finished products is
determined on the first-in, first-out method. Manufacturing supplies and
certain other inventories are valued at weighted average costs. Freight costs
for the delivery of inventories to customers are included in cost of products
sold on the statement of operations. Inventories are comprised of:

|                                         |  |              |         |      |  |   |         | 
|---------------------------------------- |  | ------------ | ------- | ---- |  | - | ------- | 
|                                         |  | December 31,
|                                         |  |             
|                                         |  | 2003         |         | 2002
|                                         |  |              |         |     
|Raw materials and manufacturing supplies |  | $            | 28,144  |      |  | $ | 22,796  | 
|Finished products                        |  |              | 108,640 |      |  |   | 79,353  | 
|                                         |  |              |         |      |  |   |         | 
|                                         |  | $            | 136,784 |      |  | $ | 102,149 | 
|                                         |  |              |         |      |  |   |         | 

Property, Plant and Equipment

Property, plant and equipment expenditures, including furnace rebuilds
which extend useful lives and expenditures for glass forming machine molds, are
capitalized and recorded at cost. For financial statement purposes, these
assets are depreciated using the straight-line method over the estimated useful
lives of the assets, except for molds which are depreciated on a unit of
production method based on units of glass produced, supplemented by a net
realizable formula to cover technical obsolescence. Generally, annual
depreciation lives average 12 years for buildings and range from 5 to 16 years
for machinery and equipment. Furnace and machine rebuilds, which are recurring
in nature and which extend the lives of the related assets, are capitalized and
depreciated over the period of extension, based on the type and extent of these
rebuilds. Depreciation of leased property recorded as capital assets is
computed on a straight-line basis over the estimated useful lives of the assets
or the life of the lease. Maintenance and repairs are charged directly to
expense as incurred. Construction in progress, included in machinery and
equipment, was approximately $25,056 and $12,750, respectively, at December 31,
2003 and 2002. Interest costs on construction projects are not capitalized due
to the short duration and recurring nature of the projects.

The Company has historically scheduled temporary 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 the
Companys labor union contracts. Costs related to the shutdown activities are
expensed as incurred.

Intangible assets and Goodwill

Effective January 1, 2002, the Company applies Statement of Financial
Accounting Standards No. 142  Goodwill and Other Intangible Assets (SFAS
142), addressing financial accounting and reporting for intangible assets
acquired individually or with a group of other assets at acquisition. SFAS 142
also addresses financial accounting and reporting for goodwill and other
intangible assets subsequent to their acquisition. SFAS 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.

Intangible assets, initially recorded at fair market value of $7,900 at
August 31, 2002, were valued by independent appraisers. These assets are
attributable to long-term customer relationships and are being amortized on a
straight-line basis over a period of ten years, which represents the estimated
economic useful lives of these relationships. Amortization expense in the year
ended December 31, 2003 and the four months ended December 31, 2002 was $790
and $264, respectively. The Company estimates annual amortization expense of
$790 in each of the next five years. Accumulated amortization at December 31,
2003 and 2002 was $1,054 and $264, respectively.

Goodwill, written off pursuant to fresh start reporting (see Note 4),
represented the excess of the 1997 purchase price over the estimated fair value
of net assets then acquired and was amortized on a straight-line basis

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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data)

over a twenty-year period. Amortization expense was $2,976 in the year
ended December 31, 2001. The following table reconciles the Companys net loss
in the year ended December 31, 2001, adjusted to exclude goodwill amortization,
to amounts previously reported:

|                                                                             |  |                         |         |  
|---------------------------------------------------------------------------- |  | ----------------------- | ------- | -
|                                                                             |  | Year Ended December 31,
|                                                                             |  |                        
|                                                                             |  | 2001                   
|                                                                             |  |                        
|Net loss, as reported                                                        |  | $                       | (51,068 | )
|Goodwill amortization                                                        |  |                         | 2,976   |  
|                                                                             |  |                         |         |  
|Net loss, as adjusted                                                        |  | $                       | (48,092 | )
|                                                                             |  |                         |         |  
|Basic and diluted net loss per share
applicable to common stock, as reported |  | $                       | (12.40  | )
|                                                                             |  |                         |         |  
|Basic and diluted net loss per share
applicable to common stock, as adjusted |  | $                       | (11.83  | )
|                                                                             |  |                         |         |  

Impairment of Long-Lived Assets

The Company applies Statement of Financial Accounting Standards No. 144 -
Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144),
addressing financial reporting for the impairment or disposal of long-lived
assets, which was effective in fiscal 2002. SFAS 144 superseded Statement of
Financial Accounting Standards No. 121 - Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of (SFAS 121) and
the reporting provisions of Accounting Principles Board Opinion No. 30 
Reporting the Results of Operations, for the disposal of a segment of a
business. SFAS 121 established the recognition and measurement standards
related to the impairment of long-lived assets. The Company evaluates the
recoverability of its long-lived assets whenever adverse events or changes in
business climate indicate that the expected undiscounted future cash flows from
the related asset may be less than previously anticipated. If the net book
value of the related asset exceeds the undiscounted future cash flows of the
asset, the carrying amount would be reduced to the present value of its
expected future cash flows and an impairment loss would be recognized. The
Company concluded that no impairment exists as of December 31, 2003. SFAS 121
did not have a material effect on the Companys results of operations or
financial position for the year ended December 31, 2001. Assets previously held
for sale have been reclassified as operating property, plant and equipment
because they had been held for sale for greater than one year. The net book
values of these assets (approximately $6,650) are equivalent to their estimated
salvage values; therefore, no future depreciation expense will be recorded.

Accounts Payable

Accounts payable includes checks issued and outstanding of $12,795 and
$13,683, respectively, at December 31, 2003 and 2002.

Fair Value of Financial Instruments

Statement
of Financial Accounting Standards No. 107 - Disclosures about
Fair Value of Financial Instruments requires disclosure of the estimated fair
values of certain financial instruments. The estimated fair value amounts have
been determined using available market information or other appropriate
valuation methodologies that require considerable judgment in interpreting
market data and developing estimates. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that the Company could
realize in a current market exchange. The use of different market assumptions
and/or estimation methodologies may have a material effect on the estimated
fair value amounts. Long-term debt is estimated to have a fair value of
approximately $484,000 at December 31, 2003 based on the then available market
information. Long-term debt was estimated to have a fair

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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data)

value equal to its carrying value at December 31, 2002. The carrying
amount of other financial instruments, except for the natural gas future and
option contracts discussed in Note 7, approximate their estimated fair values.

The fair value information presented herein is based on information
available to management as of December 31, 2003. Although management is not
aware of any factors that would significantly affect the estimated value
amounts, such amounts have not been comprehensively revalued for purposes of
these financial statements since that date and, therefore, the current
estimates of fair value may differ significantly from the amounts presented
herein.

Debt Issue Costs

The Company capitalizes financing fees related to obtaining its debt
commitments and amortizes these costs over the term of the related debt.

Accounting for Derivative Instruments and Hedging Activities

The Company applies Statement of Financial Accounting Standards No. 133 -
Accounting for Derivative Instruments and Hedging Activities, as amended by
SFAS 137, SFAS 138 and SFAS 149 (SFAS 133). SFAS 133 establishes accounting
and reporting standards requiring every derivative instrument (including
certain derivative instruments embedded in other contracts) to 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.

Income Taxes

The Company applies Statement of Financial Accounting Standards No. 109 -
Accounting for Income Taxes (SFAS 109) which establishes financial accounting
and reporting standards for the effects of income taxes that result from a
companys activities during the current and preceding years. Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to temporary differences between the financial statement carrying
amounts of assets and liabilities and their respective tax bases. Deferred tax
assets also are recognized for credit carryforwards. Deferred tax assets and
liabilities are measured using the enacted rates applicable to taxable income
in the years in which the temporary differences are expected to reverse and the
credits are expected to be used. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date. An assessment is made as to whether or not it is
more likely than not that deferred tax assets are recoverable. This assessment
includes anticipating future taxable income and the Companys tax planning
strategies and is made on an ongoing basis. Consequently, future material
changes in the valuation allowance are possible.

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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data)

Income (Loss) per Share

Basic and diluted net income (loss) per common share was computed by
dividing income (loss) applicable to common stock by the weighted-average
number of common shares and contingently issuable shares outstanding during the
period.

The computation of basic and diluted net income (loss) per share is as
follows (dollars in thousands, except per share data):

|                                                                                                               |                                                                             |                                                                   |            |              |            |              |            |              |            |              |            |        |            |   |           |         |           | 
|-------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | ----------------------------------------------------------------- | ---------- | ------------ | ---------- | ------------ | ---------- | ------------ | ---------- | ------------ | ---------- | ------ | ---------- | - | --------- | ------- | --------- | 
|                                                                                                               |                                                                             |                                                                   |            | Year         |            | Four Months  |            | Eight Months |            | Year        
|                                                                                                               |                                                                             |                                                                   |            | Ended        |            | Ended        |            | Ended        |            | Ended       
|                                                                                                               |                                                                             |                                                                   |            | December 31, |            | December 31, |            | August 31,   |            | December 31,
|                                                                                                               |                                                                             |                                                                   |            | 2003         |            | 2002         |            | 2002         |            | 2001        
|                                                                                                               |                                                                             |                                                                   |            |              |            |              |            |              |            |             
|Basic net income (loss) per share:                                                                             |                                                                             |                                                                   |            |              |            |              |            |              |            |              |            |        |            |   |           |        
|Net income (loss)                                                                                              |                                                                             | $                                                                 | (26,127    | )            |            | $            | (669       | )            |            | $            | 63,823     |        |            | $ | (51,068   | )      
|Series C preferred stock dividends                                                                             |                                                                             |                                                                   | (7,263     | )            |            |              | (3,022     | )            |            |              |           |        |            |   |          |        
|Series A and B preferred stock dividends                                                                       |                                                                             |                                                                   |           |              |            |              |           |              |            |              | (4,100     | )      |            |   | (14,057   | )      
|Excess fair value of consideration
transferred over carrying value of Series C
preferred stock upon redemption |                                                                             |                                                                   | (38,118    | )            |            |              |           |              |            |              |           |        |            |   |          |        
|                                                                                                               |                                                                             |                                                                   |            |              |            |              |            |              |            |              |            |        |            |   |           |        
|                                                                                                               | Income (loss) applicable to common stock                                    |                                                                   | $          | (71,508      | )          |              | $          | (3,691       | )          |              | $          | 59,723 |            |   | $         | (65,125 | )        
|                                                                                                               | Divided by the sum of:                                                      |                                                                   |            |              |            |              |            |              |            |              |            |        |            |   |           |         |          
|                                                                                                               |                                                                             | Weighted average shares outstanding                               |            |              | 16,364,196 |              |            |              | 13,499,995 |              |            |        | 3,357,825  |   |           |         | 2,772,212 | 
|                                                                                                               |                                                                             | Weighted average warrants outstanding                             |            |              |           |              |            |              |           |              |            |        | 1,893,531  |   |           |         | 2,479,144 | 
|                                                                                                               |                                                                             |                                                                   |            |              |            |              |            |              |            |              |            |        |            |   |           |        
|                                                                                                               |                                                                             |                                                                   | 16,364,196 |              |            |              | 13,499,995 |              |            |              | 5,251,356  |        |            |   | 5,251,356 |        
|                                                                                                               |                                                                             |                                                                   |            |              |            |              |            |              |            |              |            |        |            |   |           |        
|Basic net income (loss) per share applicable
to common stock                                                   |                                                                             | $                                                                 | (4.37      | )            |            | $            | (0.27      | )            |            | $            | 11.37      |        |            | $ | (12.40    | )      
|                                                                                                               |                                                                             |                                                                   |            |              |            |              |            |              |            |              |            |        |            |   |           |        
|Diluted net income (loss) per share:                                                                           |                                                                             |                                                                   |            |              |            |              |            |              |            |              |            |        |            |   |           |        
|                                                                                                               | Income (loss) applicable to common stock                                    |                                                                   | $          | (71,508      | )          |              | $          | (3,691       | )          |              | $          | 59,723 |            |   | $         | (65,125 | )        
|                                                                                                               | Effect of dilutive securities  Dividends
on Series A and B preferred stock |                                                                   |            |             |            |              |            |             |            |              |            | 4,100  |            |   |           |        |          
|                                                                                                               |                                                                             |                                                                   |            |              |            |              |            |              |            |              |            |        |            |   |           |        
|                                                                                                               |                                                                             | $                                                                 | (71,508    | )            |            | $            | (3,691     | )            |            | $            | 63,823     |        |            | $ | (65,125   | )      
|                                                                                                               | Divided by the sum of:                                                      |                                                                   |            |              |            |              |            |              |            |              |            |        |            |   |           |         |          
|                                                                                                               |                                                                             | Weighted average shares outstanding                               |            |              | 16,364,196 |              |            |              | 13,499,995 |              |            |        | 3,357,825  |   |           |         | 2,772,212 | 
|                                                                                                               |                                                                             | Weighted average warrants outstanding                             |            |              |           |              |            |              |           |              |            |        | 1,893,531  |   |           |         | 2,479,144 | 
|                                                                                                               |                                                                             | Dilutive potential common shares 
Series A and B preferred stock |            |              |           |              |            |              |           |              |            |        | 28,554,295 |   |           |         |          | 
|                                                                                                               |                                                                             |                                                                   |            |              |            |              |            |              |            |              |            |        |            |   |           |        
|                                                                                                               |                                                                             |                                                                   | 16,364,196 |              |            |              | 13,499,995 |              |            |              | 33,805,651 |        |            |   | 5,251,356 |        
|                                                                                                               |                                                                             |                                                                   |            |              |            |              |            |              |            |              |            |        |            |   |           |        
|Diluted net income (loss) per share applicable
to common stock                                                 |                                                                             | $                                                                 | (4.37      | )            |            | $            | (0.27      | )            |            | $            | 1.89       |        |            | $ | (12.40    | )      
|                                                                                                               |                                                                             |                                                                   |            |              |            |              |            |              |            |              |            |        |            |   |           |        

A total of 810,003 stock options currently outstanding were not included
in the calculation of diluted net income (loss) per share for the year ended
December 31, 2003, as the effect of including such options is antidilutive.
Warrants outstanding in the eight months ended August 31, 2002 and the year
ended December 31, 2001 were contingently issuable shares as the stock
underlying the warrants were issuable for no additional consideration and the
conditions necessary for share exercise had been met. There was no effect given
for the assumed conversion of 6,468,555 shares of Series A and Series B
preferred stock for the year ended December 31, 2001, as the conversion would
have been antidilutive.

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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data)

In a redemption of preferred stock, the excess of the fair value of the
consideration transferred to the holders of preferred stock over the carrying
amount of the preferred stock represents a return to the preferred
stockholders. Upon the redemption of the Series C Participating Preferred
Stock, par value $.01 (the Series C Preferred Stock) (see Note 2), the excess
consideration (2,382,348 shares of common stock valued at $16.00 per share, or
$38,118) was deducted in the calculation of income (loss) applicable to common
stock in the computation of basic and diluted net income (loss) per share,
representing $(2.33) per share for the year ended December 31, 2003.

Equity Incentive Plans

In December 2002, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 148 - Accounting for
Stock-Based Compensation  Transition and Disclosure, an amendment of Statement
No. 123 (SFAS 148). SFAS 148 amends Statement of Financial Accounting
Standards No. 123  Accounting for Stock-Based Compensation (SFAS 123) to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation.
Effective January 1, 2003, the Company adopted the fair value based method of
accounting for stock-based employee compensation under SFAS 123 by applying the
prospective method of accounting, under which the Company applies the
recognition provisions to all employee awards granted after the beginning of
2003.

The following table illustrates the effect on net income (loss) and income
(loss) per share as if the fair value based method had been applied to all
outstanding awards in each period:

|                                                               |                                                                                                      |             |         |              |       |              |      |              |       |              |        |     |       |   |         |      |        |  
|-------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | ----------- | ------- | ------------ | ----- | ------------ | ---- | ------------ | ----- | ------------ | ------ | --- | ----- | - | ------- | ---- | ------ | -
|                                                               |                                                                                                      |             |         | Year         |       | Four Months  |      | Eight Months |       | Year        
|                                                               |                                                                                                      |             |         | Ended        |       | Ended        |      | Ended        |       | Ended       
|                                                               |                                                                                                      |             |         | December 31, |       | December 31, |      | August 31,   |       | December 31,
|                                                               |                                                                                                      |             |         | 2003         |       | 2002         |      | 2002         |       | 2001        
|                                                               |                                                                                                      |             |         |              |       |              |      |              |       |             
|Reported net income (loss)                                     |                                                                                                      | $           | (26,127 | )            |       | $            | (669 | )            |       | $            | 63,823 |     |       | $ | (51,068 | )   
|                                                               | Add: Stock-based
employee compensation
expense included in
reported net income
(loss)                |             |         | 254          |       |              |      |             |       |              |        |    |       |   |         |     |       
|                                                               | Deduct: Total
stock-based employee
compensation expense
under fair value based
method for all awards |             |         | (254         | )     |              |      |             |       |              |        | (56 | )     |   |         | (507 | )     
|                                                               |                                                                                                      |             |         |              |       |              |      |              |       |              |        |     |       |   |         |      |        |  
|Pro forma net income (loss)                                    |                                                                                                      | $           | (26,127 | )            |       | $            | (669 | )            |       | $            | 63,767 |     |       | $ | (51,575 | )   
|                                                               |                                                                                                      |             |         |              |       |              |      |              |       |              |        |     |       |   |         |      |        |  
|Basic net income (loss)
per share applicable to
common stock:  |                                                                                                      |             |         |              |       |              |      |              |       |              |        |     |       |   |         |     
|                                                               |                                                                                                      | As reported |         | $            | (4.37 | )            |      | $            | (0.27 | )            |        | $   | 11.37 |   |         | $    | (12.40 | )
|                                                               |                                                                                                      |             |         |              |       |              |      |              |       |              |        |     |       |   |         |      |        |  
|                                                               |                                                                                                      | Pro forma   |         | $            | (4.37 | )            |      | $            | (0.27 | )            |        | $   | 11.36 |   |         | $    | (12.50 | )
|                                                               |                                                                                                      |             |         |              |       |              |      |              |       |              |        |     |       |   |         |      |        |  
|Diluted net income (loss)
per share applicable to
common stock |                                                                                                      |             |         |              |       |              |      |              |       |              |        |     |       |   |         |     
|                                                               |                                                                                                      | As reported |         | $            | (4.37 | )            |      | $            | (0.27 | )            |        | $   | 1.89  |   |         | $    | (12.40 | )
|                                                               |                                                                                                      |             |         |              |       |              |      |              |       |              |        |     |       |   |         |      |        |  
|                                                               |                                                                                                      | Pro forma   |         | $            | (4.37 | )            |      | $            | (0.27 | )            |        | $   | 1.89  |   |         | $    | (12.50 | )
|                                                               |                                                                                                      |             |         |              |       |              |      |              |       |              |        |     |       |   |         |      |        |  

Salaried employees of the Company participated in an incentive stock
option plan of Anchors former indirect parent. These options, which were
cancelled, generally had a life of 10 years and vested ratably over three
years. The Company elected to follow Accounting Principles Board Opinion No. 25
 Accounting for Stock Issued to Employees, in accounting for these options in
the eight months ended August 31, 2002 and the year ended December 31, 2001.

F-15



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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data)

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from estimates.

New Accounting Standards

In December 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. 46 revisedConsolidation of Variable Interest Entities (FIN
46), which replaces FASB Interpretation No. 46, issued January 2003. The
primary objectives of FIN 46 are to provide guidance on how to identify
entities for which control is achieved through means other than through voting
rights. The adoption of this interpretation did not impact the Companys
financial position or results of operations.

In January 2003, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 150Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity (SFAS 150),
effective for financial instruments entered into or modified after May 31,
2003, and otherwise effective at the beginning of the first interim period
beginning after June 15, 2003. SFAS 150 establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics of
both liabilities and equity. The adoption of SFAS 150 did not impact the
Companys financial position or results of operations.

In December 2003, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 132 REmployers Disclosures
about Pensions and Other Postretirement Benefits (SFAS 132R), effective for
financial statements with fiscal years ending after December 15, 2003 for
certain disclosures and requires interim-period disclosures effective for
interim periods beginning after December 15, 2003. SFAS 132R requires
additional disclosures to those in the original SFAS 132 about the assets,
obligations, cash flows and net periodic benefit cost of defined benefit
pension plans and other defined benefit postretirement plans. The Company
adopted the disclosure requirements of SFAS 132R.

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 January
2004, the Financial Accounting Standards Board issued FSP No. FAS 106-1 -
Accounting and Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003 (FSP FAS 106-1). Under FSP
FAS 106-1, a plan sponsor may elect to defer recognizing the effects of the
Medicare Act in the accounting for its plan under Statement of Financial
Accounting Standards No. 106Employers Accounting for Postretirement Benefits
Other Than Pensions and in providing disclosures related to the plan required
by SFAS 132R until authoritative guidance on the accounting for the federal
subsidy is issued. The Company has elected to defer recognizing the effects of
the Medicare Act, and accordingly, the accumulated post-retirement benefit
obligation and the net periodic benefit cost in the accompanying financial
statements and notes thereto do not reflect the effects of the Medicare Act on
the plan. Specific guidance on the accounting for the federal subsidy is
pending and upon its issuance, such guidance could require a sponsor to change
previously reported information.

Reclassifications

Certain reclassifications have made to the statement of cash flows for the
periods prior to the year ended December 31, 2003.

F-16



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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data) NOTE 2  Initial Public Offering On September 30, 2003, the Company consummated the Equity Offering.
Approximately $85,285 of the net proceeds of the Equity Offering were used to
redeem all of the Series C Preferred Stock. The redemption price of the Series
C Preferred Stock was equal to the sum of (i) $1,000 per share ($75,000) plus
all accrued and unpaid dividends computed to the date of redemption ($10,285)
and (ii) 15% of the fair market value of all of the outstanding shares of
common stock. The portion of the redemption price specified in clause (ii) of
the preceding sentence was paid through the issuance of 2,382,348 shares of
common stock (valued at $38,118 based on the initial public offering price of
$16.00 per share). The remainder of the net proceeds of the Equity Offering
will be used to fund working capital and for general corporate purposes.
Pending application of these net proceeds, advances outstanding under Anchors
revolving credit facility were paid down and the excess funds were invested in
short term U.S. government securities. NOTE 3  Plan of Reorganization and Liquidity On August 30, 2002, Anchor consummated a significant restructuring of its
existing debt and equity securities pursuant to the Plan under Chapter 11 of
the United States Bankruptcy Code (the Reorganization). A voluntary
bankruptcy petition was filed on April 15, 2002 (the Petition Date). As part
of the Reorganization, AGC Holding acquired 75,000 shares of newly authorized
Series C Preferred Stock for $75,000 and 13,499,995 shares of newly authorized
common stock for $5,000 (see Note 8). Ableco Finance LLC, an affiliate of
Cerberus, provided Anchor with a new $20,000 term loan (the Term Loan) (see
Note 6). In connection with the Reorganization, Anchor entered into a new
$100,000 credit facility (the Revolving Credit Facility) (see Note 5). The
Series C Preferred Stock was redeemed with a portion of the proceeds of the
Equity Offering. The Term Loan was repaid with a portion of the proceeds of a
note offering (see Note 6). Under the terms of the Plan, the holders of Anchors 11.25% First Mortgage
Notes due 2005, aggregate principal amount of $150,000 (the First Mortgage
Notes), retained their outstanding $150,000 of First Mortgage Notes and
received a consent fee of $5,625 for the waiver of the change-in-control
provisions, the elimination of the pre-payment provisions and other
non-financial changes to the terms of the First Mortgage Notes (including the
release of Consumers U.S., Inc. (Consumers U.S.) as a guarantor). Consumers
U.S. was the former parent company of Anchor. The holders of Anchors 9.875%
Senior Notes due 2008, aggregate principal amount of $50,000 (the Senior
Notes), were repaid in cash at 100% of their principal amount. Holders of
Anchors mandatorily redeemable 10% cumulative convertible preferred stock
(Series A Preferred Stock) (having an accrued liquidation value of
approximately $83,600) were entitled to receive a cash distribution of $22,500
in exchange for their shares and the Series A Preferred Stock was cancelled. Of
this amount, $21,114 has been paid through December 31, 2003 and the remaining
liability is included in accrued expenses on the balance sheet. Anchors
redeemable 8% cumulative convertible preferred stock (the Series B Preferred
Stock) (having an accrued liquidation value of approximately $105,700) and
common stock and warrants were cancelled and the holders received no
distribution under the Plan. Because of the Chapter 11 proceedings, there was no accrual of interest on
the unsecured Senior Notes after the Petition Date. If accrued through the
Effective Date, interest expense would have increased by $1,852 during the
eight months ended August 31, 2002. In addition, effective as of the Petition
Date, Anchor ceased accruing dividends on the Series A and Series B preferred
stock. In connection with the Reorganization, Anchor settled a shareholder
derivative action that had been pending in Delaware Chancery Court. The
litigation was settled for total consideration to the Company of approximately
$9,000, of which approximately $6,300 was in cash, with the balance of the
consideration to Anchor being an assignment to Anchor by Consumers U.S. of the
funds it would otherwise have been entitled to receive under the Plan. The
settlement also included the exchange of mutual releases by the parties and
payment by Anchor of certain legal fees. The settlement of the shareholder
derivative action was approved by the Delaware Chancery Court and
was recorded in August 2002 as a component of restructuring, net, in the
accompanying financial statements. F-17




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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data) Implementation of the settlement was
completed in the fourth quarter of 2002 with Anchor receiving approximately
$6,300 in cash. Anchor also entered into an agreement with the Pension Benefit Guaranty
Corporation (PBGC). At the Effective Date, Anchor paid $20,750 to the PBGC
and entered into a ten-year payment obligation (see Note 11). All of Anchors other unaffiliated creditors, including trade creditors,
were unimpaired and have been or will be paid in the ordinary course of
business. During the course of the bankruptcy proceeding, including the events
leading up to the preparation and execution of the prearranged plan, the
Company incurred several costs that directly resulted from the Companys
restructuring through the Plan. Reorganization items were items that met the
definition of reorganization items per the provisions of American Institute of
Certified Public Accountants Statement of Position 90-7 Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code (SOP 90-7), which
included costs and gains that were incurred after the Chapter 11 filing and
were a direct result of the bankruptcy proceeding and gains and losses
resulting from the application of fresh-start reporting. Restructuring items
included costs and gains that directly related to the restructuring of the
Company through the Plan and were either incurred prior to the filing of
Chapter 11 or were not incurred as a direct result of the bankruptcy itself. Restructuring and reorganization payments included as financing activities
in the statements of cash flows were comprised of attorneys and professional
fees, financial institution fees incurred in obtaining debtor-in-possession
secured financing and consent fees paid to First Mortgage Note holders. All
other restructuring and reorganization payments were classified as operating
activities. The costs and gains are summarized as follows (dollars in thousands): Reorganization items, net:Fresh start adjustments to reflect the impact of
fresh-start reporting in accordance with the provisions
of SOP 90-7, which included increasing property, plant
and equipment ($86,860), recognizing identifiable
intangible assets for customer relationships ($7,900) and
writing off goodwill ($44,852)
    
    $
    (49,908
    )Debtor-in-possession secured financing facility fees
charged by the bank to execute the Companys
debtor-in-possession financing arrangement during the
course of the bankruptcy proceeding
    
    
    2,450Attorneys fees incurred for legal services performed,
claims processor fees and printing fees incurred for the
bankruptcy proceeding
    
    
    1,687Write-off of the unamortized balance of deferred
financing costs related to Senior Notes. The Senior Notes
were repaid with proceeds obtained when the Plan became
effective
    
    
    1,276Write-off of interest accrued on the Senior Notes prior
to the filing of Chapter 11. Interest ceased to accrue
under the bankruptcy proceedings and accrued interest was
forgiven when the plan became effective
    
    
    (2,894
    )2,519$
    (47,389
    )
 F-18




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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data)

Restructuring, net:Consulting fees and attorneys fees incurred with respect
to the preparation of the Plan. These costs were not
considered reorganization expenses because certain costs
were incurred prior to the filing for bankruptcy and such
costs were not directly related to the bankruptcy
proceeding
    
    $
    10,068Direct costs of the restructuring, which include an
accrual for claims under the Plan ($2,400), the cost of
employee restructuring bonuses paid upon the successful
implementation of the Plan ($2,110), purchase of certain
director/officer liability and environmental liability
insurance policies mandated by the Plan ($1,550), the
write-off of deferred financing fees of the revolving
credit facility upon entering into the
debtor-in-possession secured financing facility ($1,165)
and severance charges ($728 for 12 employees). At
December 31, 2002, remaining liabilities were $987 for
the accrual for claims
    
    
    7,953Consent fee paid to the holders of the First Mortgage
Notes under the terms of the Plan, which was negotiated
prior to the Chapter 11 filing and was directly
stipulated by the Plan
    
    
    5,625Write-down of a customer notes receivable of $10,000, due
to a negotiated early collection of the balance. The
notes were originally entered into in 1999 in
satisfaction of accounts receivable and a strategic
alliance commitment and were scheduled to mature in 2004. Cerberus, through certain Cerberus-affiliated funds and
managed accounts invested $80.0 million of new equity
capital into the Company, directed the settlement of the
notes, as part of the restructuring, in order to fund
other costs incurred with respect to the restructuring
    
    
    4,473Other fees, which include a consent fee of $2,500 paid
for settlement of change-in-control issues related to the
Plan and reimbursement of professional fees of $1,400
incurred by Cerberus
    
    
    3,900Gain on cash settlement of a shareholders derivative
action offset by legal fees related to the settlement
    
    
    251Modifications to the Companys post-retirement benefits
program, implemented as part of the Reorganization,
resulting in a reduction of long-term post retirement
liabilities
    
    
    (24,432
    )Adjustment of previously recorded pension liabilities to
reflect amounts agreed upon under the PBGC Agreement (see
Note 11)
    
    
    (8,233
    )$
    (395
    )
 F-19




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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data) NOTE 4  Fresh Start Reporting Upon the Effective Date, Anchor adopted fresh start reporting pursuant to
SOP 90-7. The adoption of fresh start reporting results in Anchor revaluing its
balance sheet to fair value based on the reorganization value of the Company.
The reorganization value of an entity approximates the fair value of the entity
before considering liabilities and approximates the amount a willing buyer
would pay for the assets immediately after restructuring. The reorganization
value was determined by the negotiated total enterprise value for Anchor
reflected in the Plan and the Reorganization, which was the product of a six
month solicitation of proposals conducted by the prior Board of Directors and a
nationally recognized investment banking firm. The reorganization value of the
entity was allocated to assets based on the relative fair values of the assets.
Liabilities at Plan consummation date are stated at the present value of
amounts to be paid. The fair values of substantially all of the property, plant
and equipment, identifiable intangible assets and outstanding debt and equity
securities of the Company were determined by independent appraisers. The Reorganization and adoption of fresh start reporting resulted in the
following adjustments to the condensed balance sheet of Anchor as of August 31,
2002: Predecessor
    
    
    
    
    
    
    
    
    
    ReorganizedCompany at
    
    Reorganization
    
    Fresh Start
    
    Company atAugust 31, 2002
    
    Adjustments
    
    Adjustments
    
    August 31, 2002Current assets
    
    $
    118,438
    
    
    $
    34,810
    (a), (b), (c)
    
    $
    
    
    
    $
    153,248Property, plant and equipment
    
    
    285,630
    
    
    
    
    
    
    
    86,860
    (e)
    
    
    372,490Other asset
    
    
    11,189
    
    
    
    1,408
    (a), (c)
    
    
    
    
    
    
    12,597Goodwill and intangible assets
    
    
    44,852
    
    
    
    
    
    
    
    (36,952)
    (d), (e)
    
    
    7,900$
    460,109
    
    
    $
    36,218
    
    
    $
    49,908
    
    
    $
    546,235Current liabilities
    
    $
    155,656
    
    
    $
    8,718
    (b), (c)
    
    $
    93
    
    
    $
    164,467Long-term debt
    
    
    266,886
    
    
    
    (30,000)
    (a), (b)
    
    
    
    
    
    
    236,886Long-term post-retirement
liabilities
    
    
    39,910
    
    
    
    
    
    
    
    
    
    
    
    39,910Other long-term liabilities
    
    
    24,972
    
    
    
    
    
    
    
    
    
    
    
    24,972487,424
    
    
    
    (21,282
    )
    
    
    93
    (d)
    
    
    466,235Redeemable preferred stock
    
    
    83,659
    
    
    
    75,000
    (a)
    
    
    (61,159
    )  (d)
    
    
    75,000(22,500
    )  (b)Stockholders equity (deficit)
    
    
    (110,974
    )
    
    
    5,000
    (a), (b)
    
    
    110,974
    (d)
    
    
    5,000$
    460,109
    
    
    $
    36,218
    
    
    $
    49,908
    
    
    $
    546,235
  (a)
    
    Reflects the proceeds from the issuance of 75,000 shares of Series
C Preferred Stock ($75,000), 13,499,995 shares of Common Stock
($5,000), proceeds from the issuance of the Term Loan ($20,000) and
payment of financing fees.  (b)
    
    Reflects the distributions under the Plan to repay the Senior Notes
($50,000) and the accrual of the final distribution to the holders of
the Series A preferred stock ($22,500).  (c)
    
    Reflects the payoff of the debtor-in-possession secured financing
facility, the proceeds under the Revolving Credit Facility and the
payment of financing fees. (See Note 3.)  (d)
    
    Reflects the cancellation of the remaining value of the Series A
preferred stock ($61,159), the cancellation of the Series B preferred
stock ($105,731), the cancellation of the common stock ($20,890) and
warrants ($9,446) and other accumulated deficit items ($247,041) of the
Predecessor Company.  (e)
    
    Reflects the write off of goodwill ($44,852) and the revaluation of
Companys property, plant and equipment ($86,860) and identifiable
intangible assets ($7,900) based upon an independent appraisal. F-20




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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data)   NOTE 5  Revolving Credit Facility On August 30, 2002, Anchor entered into a loan and security agreement with
various financial institutions as lenders, Congress Financial Corporation
(Central), as administrative agent and collateral agent for the lenders, and
Bank of America, N.A., as documentation agent, to provide the Revolving Credit
Facility. The Revolving Credit Facility permits drawings of up to $100,000 in
the aggregate and includes a $15,000 subfacility for letters of credit. The
Revolving Credit Facility matures on August 30, 2006. Availability under the Revolving Credit Facility is restricted to the
lesser of (i) $100,000 and (ii) the borrowing base amount. The borrowing base
amount is defined as the amount equal to (A) the lesser of (i) the amount equal
to (a) eighty-five (85%) percent of the net amount of eligible accounts plus
(b) the lesser of (1) $60,000 or (2) sixty (60%) percent multiplied by the
value of the eligible inventory or (ii) $100,000; minus (B) reserves in such
amounts as the agent may from time to time establish. Advances under the
Revolving Credit Facility may be made as prime rate loans or eurodollar rate
loans at the Companys election. Interest rates payable upon such advances are
based upon the prime rate or eurodollar rate depending on the type of loan,
plus an applicable margin. The applicable margin varies with availability and
ranges from 0.50% to 1.00% for prime rate loans, 2.25% to 2.75% for eurodollar
rate loans and 2.00% to 2.50% for letters of credit. The loan and security
agreement contains certain fees, including closing fees, servicing fees, unused
line fees and early termination fees. Loans made pursuant to the Revolving Credit Facility are secured by a
first priority security interest in, a lien upon, and a right of set off
against all of the Companys inventories, receivables, general intangibles and
proceeds therefrom. All cash collections are accounted for as reductions of
advances outstanding under the Revolving Credit Facility. The Revolving Credit Facility contains customary negative covenants and
restrictions for transactions, including among other restrictions and without
limitation, restrictions on indebtedness, liens, investments, fundamental
business changes, asset dispositions outside of the ordinary course of
business, restricted junior payments, transactions with affiliates, change of
control and changes relating to indebtedness. In addition, the Revolving Credit
Facility requires that the Company meet a quarterly fixed charge coverage test
unless minimum availability declines below $10,000, in which case the Company
must meet a monthly fixed charge coverage test. The Revolving Credit Facility
contains customary events of default, including, without limitation,
non-payment of principal, interest or fees, violation of certain covenants,
inaccuracy of representations and warranties in any material respect, and cross
defaults with certain other indebtedness and agreements, including, without
limitation, the Senior Secured Note indenture and the PBGC settlement
agreement. At December 31, 2003, there were no advances outstanding under the
Revolving Credit Facility, borrowing availability was $73,789 and outstanding
letters of credit on this facility were $7,627. During the year ended December
31, 2003, average advances outstanding were approximately $25,503, the average
interest rate was 5.88% and the highest month-end advance was $68,488. At December 31, 2002, advances outstanding under the Revolving Credit
Facility were $47,413, borrowing availability was $28,129 and outstanding
letters of credit on this facility were $1,000. At December 31, 2002, the
weighted average interest rate on borrowings outstanding was 4.09%. During the
four months ended December 31, 2002, average advances outstanding were
approximately $53,486, the average interest rate was 5.04% and the highest
month-end advance was $56,939. During the eight months ended August 31, 2002,
average advances outstanding were approximately $57,554, the average interest
rate was 6.01% and the highest month-end advance was $62,108. At December 31, 2002, outstanding letters of credit under the
debtor-in-possession secured financing facility were approximately $3,998 and
were collateralized by a cash deposit, recorded as restricted cash on the
balance sheet at December 31, 2002. The transition of these letters of credit
to the Revolving Credit Facility and the return of the cash deposit were
completed in the first quarter of 2003. F-21




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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data) NOTE 6  Long-Term Debt Long-term debt consists of the following: December 31,2003
    
    2002$350,000 Senior Secured Notes, interest at 11% due 2013
    
    $
    350,000
    
    
    $
    Unamortized premium on Senior Secured Notes
    
    
    3,586
    
    
    
    $150,000
First Mortgage Notes, interest at 111⁄4% due 2005
    
    
    
    
    
    
    150,000$20,000 Term Loan, interest at 14% due 2005
    
    
    
    
    
    
    20,000Capital lease obligations
    
    
    17,550
    
    
    
    16,359371,136
    
    
    
    186,359PBGC obligation
    
    
    60,640
    
    
    
    65,029431,776
    
    
    
    251,388Less current maturities of long-term debt
    
    
    (8,895
    )
    
    
    (8,315
    )$
    422,881
    
    
    $
    243,073
 On February 7, 2003, the Company completed an offering of 11% Senior
Secured Notes due 2013, aggregate principal amount of $300,000 (the Senior
Secured Notes), issued under an indenture dated as of February 7, 2003, among
the Company and The Bank of New York, as Trustee (the Indenture). The Senior
Secured Notes are senior secured obligations of the Company, ranking equal in
right of payment with all existing and future unsubordinated indebtedness of
the Company and senior in right of payment to all future subordinated
indebtedness of the Company. The Senior Secured Notes are secured by a first
priority lien, subject to certain permitted encumbrances, on substantially all
of Anchors existing real property, equipment and other fixed assets relating
to Anchors nine operating glass container manufacturing facilities. The
collateral does not include inventory, accounts receivable or intangible
assets. The net book value of the collateral was $422,152 at December 31, 2003. Proceeds from the issuance of the Senior Secured Notes, net of fees, were
approximately $289,000 and were used to repay the principal amount outstanding
under the First Mortgage Notes plus accrued interest thereon ($156,256 in
total), the principal amount outstanding under the Term Loan plus accrued
interest thereon and a prepayment fee ($20,354 in total) and advances then
outstanding under the Revolving Credit Facility ($66,886 in total), which
included funds for certain of the Companys capital improvement projects. The
remaining proceeds of approximately $45,000 were used to terminate certain
equipment leases by purchasing from the respective lessors the equipment leased
thereunder. The Company entered into a Registration Rights Agreement on February 7,
2003, under which the Company registered with the Securities and Exchange
Commission (SEC) new Senior Secured Notes, having substantially identical
terms as the Senior Secured Notes. On August 5, 2003, the Company completed an
exchange offer with respect to $298,800 of Senior Secured Notes tendered in the
exchange offer, for a like principal amount of new Senior Secured Notes,
identical in all material respects to the Senior Secured Notes, except that the
new Senior Secured Notes do not bear legends restricting the transfer thereof. On August 5, 2003, the Company completed an additional offering of 11%
Senior Secured Notes due 2013, aggregate principal amount of $50,000 (the
Additional Notes). Proceeds from the issuance of the Additional Notes, net of
fees, were approximately $53,400. The Additional Notes were issued at an issue
price of 107.5% of their principal amount. The Additional Notes were issued
under the same Indenture as the Senior Secured Notes, as supplemented by a
first supplemental indenture, dated August 5, 2003, and their terms are
identical in all material respects to the Senior Secured Notes, except that the
Additional Notes were then subject to certain restrictions on transfer. 100% of
the net proceeds from the issuance of the Additional Notes were used to finance
improvements to the collateral securing the Senior Secured Notes and the
Additional Notes in compliance with the Indenture. Pending F-22




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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data) application of such proceeds, a portion of the net proceeds were used to
pay down advances outstanding under the Revolving Credit Facility of
approximately $49,700. The Company entered into a Registration Rights Agreement on August 5, 2003
with respect to the Additional Notes under which the Company registered with
the SEC new Additional Notes, having substantially identical terms as the
Additional Notes. On January 29, 2004, the Company completed an exchange offer
with respect to $50,000 of Additional Notes tendered in the exchange offer, for
a like principal amount of new Additional Notes, identical in all material

respects to the Additional Notes, except that the new Additional Notes do not
bear legends restricting the transfer thereof. Interest on the $350,000 aggregate principal amount of Senior Secured
Notes accrues at 11% per annum and is payable semiannually on each February 15
and August 15 to registered holders of the Senior Secured Notes at the close of
business on the February 1 and August 1 immediately preceding the applicable
interest payment date. The Senior Secured Notes are redeemable, in whole or in part, at the
Companys option on or after February 15, 2008, at redemption prices listed in
the Indenture. At any time (which may be more than once) before February 15,
2006, the Company at its option may redeem up to 35% of the initial outstanding
notes with money raised in one or more public equity offerings, at redemption
prices listed in the Indenture. The Indenture provides that upon the occurrence
of a change of control, the Company will be required to offer to purchase all
of the Senior Secured Notes at a purchase price equal to 101% of the principal
amount thereof plus accrued interest to the date of purchase. The Indenture, subject to certain exceptions, restricts the Company from
taking various actions including, but not limited to, subject to specified
exceptions, the incurrence of additional indebtedness, the payment of dividends
and other restricted payments, the granting of additional liens, mergers,
consolidations and sales of assets and transactions with affiliates. On December 26, 2002, the Company entered in a master lease agreement with
a major lessor. The master lease agreement is structured as a capital lease.
Equipment leases pursuant to the master lease will be secured by a first
priority lien on such assets. Under this agreement, the Company financed
approximately $20,000 of equipment. The lease agreement has a term of five
years and contains, among other things, a fixed charge coverage test. On August 30, 2002, the Company entered into the Term Loan with Ableco
Finance LLC, as agent for the lenders, to provide for a senior secured term
loan in the amount of $20,000. The full amount of the loan was drawn down on
August 30, 2002, and bore interest at 14% per annum, payable monthly in
arrears. The Term Loan was repaid with proceeds from the offering of the Senior
Secured Notes. Effective April 17, 1997, the Company completed an offering of the First
Mortgage Notes, issued under an indenture dated as of April 17, 1997, among the
Company, Consumers U.S. and The Bank of New York, as Trustee. Effective August
30, 2002, Anchor entered into a supplemental indenture with the holders of the
First Mortgage Notes to provide for the waiver of the change-in-control
provisions, the elimination of pre-payment provisions and other non-financial
changes to the terms of the First Mortgage Notes. Additionally, Consumers U.S.
was released as a guarantor of the First Mortgage Notes. The First Mortgage
Notes were repaid with proceeds from the offering of the Senior Secured Notes. All of the Companys debt agreements contain cross-default provisions. Principal payments required on long-term debt, including payments made
under the PBGC obligation, are $8,895 in 2004, $9,338 in 2005, $9,834 in 2006,
$10,377 in 2007 and $7,961 in 2008. Payments to be made in 2009 and thereafter
are $381,785. F-23




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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data) Other long-term debt includes capital leases, which have imputed interest
rates ranging from 6.0% to 9.0%. Imputed interest on capital leases as of
December 31, 2003 and 2002 was $2,553 and $4,854, respectively. Property, plant
and equipment under capital lease obligations approximated: December 31,2003
    
    2002Land
    
    $
    190
    
    
    $
    190Buildings
    
    
    1,712
    
    
    
    1,712Machinery and equipment
    
    
    29,533
    
    
    
    20,186Less accumulated amortization
    
    
    (4,935
    )
    
    
    (188
    )$
    26,500
    
    
    $
    21,900
 NOTE 7  Accounting for Derivative Instruments and Hedging Activities The Company hedges certain of its estimated natural gas purchases through
the purchase of natural gas futures, which qualify for cash flow hedge
treatment under SFAS 133. These contracts typically cover a maximum period of
six to twelve months, although at December 31, 2003, the Company had hedges in
place extending into 2005. There were no outstanding futures at December 31,
2002. At August 31, 2002, the Company acquired futures to hedge gas purchases
from September 2002 through December 2002 and at December 31, 2001 acquired
futures to hedge gas purchases from January 2002 through March 2002. Amounts recognized (gain/(loss)) in cost of products sold related to gas
futures during the year ended December 31, 2003, the four months ended December
31, 2002, the eight months ended August 31, 2002 and the year ended December
31, 2001 were $3,456, $617, $(2,159) and $(3,950), respectively. The Company recorded the fair market value of the outstanding futures,
approximately $2,144, in other current assets and accumulated comprehensive
income on the balance sheet as of December 31, 2003. In the year ended December 31, 2003, the four months ended December 31,
2002, the eight months ended August 31, 2002 and the year ended December 31,
2001, the Company entered into put and call options for purchases of natural
gas. These options do not qualify as an effective cash flow hedge for natural
gas purchases. Mark to market losses on such derivatives are included in other
income (expense), net. The fair value of these options at December 31, 2003 was $826 and is
recorded in other current assets. The Company recognized derivative loss of
$413 in the year ended December 31, 2003. The fair value of the outstanding options at December 31, 2002 was $680
and was recorded in other current assets. The Company recognized derivative
income of $71 and $562, respectively, in the four months ended December 31,
2002 and the eight months ended August 31, 2002. The Company recognized a
derivative loss related to these options of $334 in the year ended December 31,
2001. NOTE 8  Capital Stock In connection with the Equity Offering, the Company executed a three for
two split on September 23, 2003, with no change in par value, of its common
stock issued and outstanding as of, and subsequent to, August 31, 2002. All
share and per share amounts in the accompanying financial statements have been
restated to give effect to this stock split. Effective September 23, 2003, the authorized capital stock of Anchor
consists of 60,000,000 shares of common stock, par value $.10 per share, of
which 24,507,343 shares are issued and outstanding, and 20,000,000 shares of
preferred stock, par value $.01 per share, with no shares outstanding. F-24




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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data) Redeemable Preferred Stock The Anchor Board of Directors has the authority, by adopting resolutions,
to issue shares of preferred stock in one or more series, with the designations
and preferences for each series set forth in the adopting resolutions. The
certificate of incorporation authorizes the Board of Directors to determine,
among other things, the rights, preferences and limitations pertaining to each
series of preferred stock. All of the Series C Preferred Stock was redeemed with a portion of the net
proceeds of the Equity Offering of approximately $85,285. The redemption price
of the Series C Preferred Stock was equal to the sum of (i) $1,000 per share
($75,000) plus all accrued and unpaid dividends computed to the date of
redemption ($10,285) and (ii) 15% of the fair market value of all of the
outstanding shares of common stock. The portion of the redemption price
specified in clause (ii) of the preceding sentence was paid through the
issuance of 2,382,348 shares of common stock (valued at $38,118 based on the
initial public offering price of $16.00 per share). The holders of the Series C Preferred Stock were entitled to vote as a
single class on all actions to be taken by Anchor stockholders, together with
all other classes and series of Anchors stock. The holders of the Series C
Preferred Stock had full voting rights and powers equal to the voting rights
and powers of the holders of Anchors common stock. The votes of the holders of
Series C Preferred Stock, in the aggregate, would have constituted 15% of the
total aggregate votes entitled to vote on any such action. The Series C Preferred Stock was entitled to receive dividends, at a rate
per annum equal to 12%, prior to and in preference to any declaration or
payment of any dividend on any junior securities. Dividends were payable
quarterly in cash, if and when declared by the Board of Directors and, to the
extent not paid currently with respect to any quarterly period, were accrued
and compounded quarterly. Unpaid dividends of $3,022 ($40.29 per share) as of
December 31, 2002 were accrued and included in redeemable preferred stock in
the accompanying balance sheet. In addition, the Series C Preferred Stock was
entitled to receive dividends and distributions equal to 15% of the amount of
dividends paid on the outstanding shares of common stock. Capital Stock of the Predecessor Company Prior to the Reorganization, the Company had designated 2,239,320 shares
as Series A Preferred Stock and 5,000,000 shares as Series B Preferred Stock.
The holders of Series A Preferred Stock were entitled to receive, when and as
declared by the Board of Directors of the Company cumulative dividends, payable
quarterly in cash, at an annual rate of 10%. Shares of Series A Preferred Stock
were convertible into shares of common stock, at the option of the holder, at a
ratio determined by dividing the liquidation value of the Series A Preferred
Stock of $25.00 by $6.00 and such ratio was subject to adjustment from time to
time. The holders of Series B Preferred Stock were entitled to receive
cumulative dividends, payable quarterly at an annual rate of 8%. Shares of
Series B Preferred Stock were not subject to mandatory redemption. Shares of
Series B Preferred Stock were convertible into shares of common stock, at the
option of the holder, at a ratio determined by dividing the liquidation value
of the Series B Preferred Stock of $25.00 by $5.50 and such ratio was subject
to adjustment from time to time. Under the terms of the Plan, Series A Preferred Stock, the Series B
Preferred Stock, common stock and warrants of Anchor outstanding at August 30,
2002 were cancelled. F-25




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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data) NOTE 9  Equity Incentive Plan In 2002, the Board of Directors of Anchor (the Board) approved an Equity
Incentive Plan, designed to motivate and retain individuals who are responsible
for the attainment of the Companys primary long-term performance goals,
covering employees, directors and consultants. The plan provides for the grant
of non-qualified stock options and incentive stock options for shares of Anchor
common stock and restricted stock to participants of the plan selected by the
Board or a committee of the Board (the Administrator). Effective January 9,
2003, the Administrator granted a total of 337,500 non-qualified stock options
to selected participants. On September 30, 2003, all unvested awards under the
January 9, 2003 grant became immediately exercisable upon the consummation of
the Equity Offering. All compensation charges related to these options were
expensed in 2003. Effective September 30, 2003, the Administrator granted a total of 472,503
non-qualified stock options to selected participants. The terms and conditions
of awards, as determined by the Administrator, were as follows: 50.0% of an
option grant vests 1/3 on the first anniversary of the grant date, 1/3 on the
second anniversary of the grant date and 1/3 on the third anniversary of the
grant date; and the remaining 50.0% of the option grant vests in three tranches
of equal amounts on the first, second and third anniversary of the grant date
if the Company attains certain performance targets established by the Board. On
January 14, 2004, these options were modified to vest 1/3 on the first
anniversary of the grant date, 1/3 on the second anniversary of the grant date
and 1/3 on the third anniversary of the grant date. 1.5 million shares of common stock have been reserved under the plan, of
which 689,997 shares of common stock are available for future issuance under
the plan. Upon a Liquidity Event, all unvested awards will become immediately
exercisable and the Administrator may determine the treatment of all vested
awards at the time of the Liquidity Event. A Liquidity Event is defined as an
event in which (1) any person who is not an affiliate becomes the beneficial
owner, directly or indirectly, of 50% or more of the combined voting power of
Anchors then outstanding securities, (2) the sale, transfer or other
disposition of all or substantially all of Anchors business and, whether by
sale of assets, merger or otherwise to a person other than Cerberus, (3) if
specified by the Companys Board of Directors in an award at the time of grant,
the consummation of an initial public offering of common equity securities or
(4) dissolution and liquidation of the Company. The options to purchase common stock were generally granted at a price
equal to the estimated market price of the stock on the date of grant and will
expire no later than ten years after the date of grant. The Company recorded
stock compensation expense of $254 in the year ended December 31, 2003. Activity for the stock option plan for the year ended December 31, 2003 is
as follows: Weighted
    
    WeightedNumber
    
    Average
    
    Averageof
    
    Exercise
    
    FairShares
    
    Price
    
    ValueOptions outstanding, January 1, 2003
    
    
    Granted
    
    
    337,500
    
    
    $
    2.33
    
    
    $
    0.40Granted
    
    
    472,503
    
    
    $
    16.00
    
    
    $
    3.10Exercised
    
    
    Forfeited
    
    
    Options outstanding, December 31,
2003
    
    
    810,003
    
    
    $
    10.30
 In
accordance with SFAS 123, the fair values of the 2003 option grants were estimated on the date of each grant using the Black-Scholes option
pricing model. The assumptions for these grants were: (i)
risk-free interest rate of 2.35% to 3.80%, (ii) expected option life of 4 to 5
years, (iii) volatility of nil to 20.7% and (iv) expected dividend yield of nil
to 1.0%. F-26




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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data) The following table summarizes information about options outstanding at
December 31, 2003: Exercise Prices$
    2.33
    
    
    $
    16.00Outstanding:Shares
    
    
    337,500
    
    
    
    472,503Average remaining life (in years)
    
    
    9.0
    
    
    
    9.7Average exercise price
    
    $
    2.33
    
    
    $
    16.00Exercisable:Shares
    
    
    337,500
    
    
    
    Average exercise price
    
    $
    2.33
    
    
    $
    
 NOTE 10  Related Party Information From 1997 until the latter part of 2001, the Company was part of a group
of glass manufacturing companies with Consumers Packaging Inc. (Consumers)
and GGC, L.L.C. (GGC) each of which was controlled through G&G Investments,
Inc. (G&G). The Company had, in the past, engaged in a variety of transactions
(including joint purchasing, engineering, utilization of the Companys mold and
repair shops and management information systems) with Consumers and GGC. On
October 1, 2001, Consumers completed the sale of its Canadian glass producing
assets to a third party. In February 2002, Mr. J. Ghaznavi, a former director
and officer of the Company, purchased GGC from Consumers. Following these
events, Anchor separated activities related to these functions, with Consumers
as of October 1, 2001, and with GGC as of February 2002, with Anchor and GGC
entering into the agreement described below. Anchor and GGC entered into a services agreement, as amended, to delineate
the transitional nature of the services to be provided by Anchor, whereby
Anchor agreed to assist GGC in certain functions, including information
systems, through 2004. GGC will pay a fee to Anchor of $500 for each year of
the agreement, plus a percentage of GGCs cash flows, as determined in
accordance with the services agreement, payable in three annual installments
commencing on April 30, 2005. This agreement is subject to termination by
Anchor or GGC, with notice, after June 30, 2002. Anchor has fully reserved the
$835 of receivables under the agreement as of December 31, 2003. G&G Investments, Inc. The Company was party to a management agreement with G&G, in which G&G was
to provide specified managerial services for the Company. The Company notified
G&G that the agreement was terminated as of the beginning of January 2001. In
the fourth quarter of 2001, the Company reversed fees previously accrued of
$1,875 to selling and administrative expenses in the statement of operations. 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
of approximately $17,300 in September 1998 (the G&G Loan). The funds for the
G&G Loan were obtained through a borrowing under a prior credit facility. The
transaction did not close and, in March 2000, G&G commenced an arbitration
proceeding against the principal owners of the European glass manufacturer in
accordance with the terms of the agreement to secure a return of the advance.
Arbitration hearings were held in 2001. A decision was rendered in the fourth
quarter of 2001 in favor of the principal owners of the European glass
manufacturer. As a result of the decision and questions regarding the
collectibility of the G&G Loan, Anchor recorded a provision of $17,447 (the
advance of $17,330 and other costs of $117), as a related party provision on
the statement of operations in 2001. As a result of the arbitration ruling, in
the fourth quarter of 2001, Anchor reversed the accrual for the unpaid interest
receivable of $1,766, for the period October 1, 2000 through December 31, 2001,
through a charge to interest expense. F-27




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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data) Related party transactions with affiliates of G&G, including Interstate
Express for freight purchases, are summarized as follows: Eight Months
    
    YearEnded
    
    EndedAugust 31,
    
    December 31,2002
    
    2001Purchases of freight
    
    $
    1,009
    
    
    $
    2,228Payable for freight
    
    
    
    
    
    
    66Purchases of inventory and other
    
    
    
    
    
    
    1Payable for inventory and other.
    
    
    
    
    
    
    173Allocation of aircraft charges
    
    
    
    
    
    
    189
 In connection with the Reorganization, the Company entered into a
settlement agreement with Mr. J. Ghaznavi and G&G, concluding issues
outstanding. Consumers and affiliates At December 31, 2001, before the provision noted below, G&G, Consumers and
their affiliates owed Anchor approximately $17,400, (including an offset of
approximately $8,600 related to the allocation of the write-off of certain
software costs) in addition to the advance to affiliate receivable of
approximately $17,300, while Anchor owed G&G, Consumers and their affiliates
approximately $4,900. Additionally, Anchor held an investment in 1,842,000
common shares of Consumers. In 1999, management approved the purchase of
1,842,000 shares of Consumers common stock for $3,000. During 2001, the
remaining balance of the investment of $1,842 was recorded as a related party
provision. As a result of Consumers announcement of its intention to sell its
Canadian glass producing assets to a third party and Consumers filing under
the Canadian Companies Creditors Arrangement Act, Anchor recorded a charge to
earnings during 2001 of $18,221 ($24,979 receivables and $1,842 investment in
common shares of Consumers, net of $8,600 payables). This amount was recorded
as a related party provision on the statement of operations. Of the total of approximately $6,300 cash settlement of the shareholder
derivative action, as discussed in Note 3, the Company received approximately
$2,000 in cash from Consumers in the fourth quarter of 2002. Related party transactions with Consumers and its affiliates are
summarized as follows (there were no comparable transactions thereafter): Year EndedDecember 31,2001Purchases of inventory and other
    
    $
    348Payable for inventory and other
    
    
    3,948Sales of molds and inventory
    
    
    4,828Receivable from sales of molds and inventory
    
    
    1,020Allocation of expenses and other
    
    
    6,878
 Other The Company has employee receivables of $45 and $30 outstanding, as of
December 31, 2003 and 2002, respectively. F-28




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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data) Stock Option Plan  Consumers Plan Salaried employees of the Company participated in the Director and
Employee Incentive Stock Option Plan, 1996 of Consumers. All options under the
plan were cancelled. Because the exercise price of employee stock options
equaled the market price of the stock on the date of the grant, no compensation
expense was recorded for the eight months ended August 31, 2002 and the year
ended December 31, 2001. In accordance with SFAS 123, the fair value of option
grants was estimated on the date of grant using the Black-Scholes option
pricing model with the following assumptions for pro forma footnote purposes:
(i) risk-free interest rate ranging from 5.50% to 5.99%, (ii) expected option
life of 4 years, (iii) expected volatility of 41.51% and (iv) no expected
dividend yield. Information related to stock options for the eight months ended
August 31, 2002 and the year ended December 31, 2001 is as follows: Weighted
    
    WeightedNumber
    
    Average
    
    Averageof
    
    Exercise
    
    FairShares
    
    Price (Cdn$)
    
    Value (Cdn$)Options outstanding, January 1, 2001
    
    
    1,083,500
    
    
    $
    7.33Granted
    
    
    Forfeited
    
    
    (275,000
    )
    
    $
    7.77
    
    
    $
    4.80Options outstanding, December 31,
2001
    
    
    808,500
    
    
    $
    7.18Cancelled
    
    
    (808,500
    )
    
    $
    (7.18
    )Options outstanding, August 31, 2002
    
    
    
 NOTE 11  Pension Plans and Other Post-retirement Benefits Effective December 31, 2001, Anchor entered the Glass Companies
Multiemployer Pension Plan (the MEPP), created from the merger of the Anchor
defined benefit pension plan and the GGC defined benefit plan for hourly
employees. Anchor, GGC, the Board of Trustees of the MEPP and the unions
representing certain employees at Anchor and GGC considered the MEPP to be a
multiemployer pension plan. In July 2002, the United States Department of Labor
notified Anchor that it determined that the MEPP did not meet the definition of
a multiemployer plan under the Employee Retirement Income Security Act of 1974,
as amended (ERISA). Effective July 31, 2002, Anchor and the PBGC entered into an agreement to
govern the dissolution of the Anchor portion of the MEPP (the PBGC
Agreement). Pursuant to the PBGC Agreement and collective bargaining
agreements with the unions representing participants under the MEPP, Anchor
withdrew from the MEPP on July 31, 2002. The PBGC has proceeded in accordance
with procedures under ERISA to partition the assets and liabilities of the MEPP
into two parts, one part attributable to Anchor employees and former employees
and one part attributable to GGC employees and former employees and terminate
the Anchor portion. The termination was effective as of July 31, 2002. Anchor
renegotiated its labor union contracts and, effective August 1, 2002, began
contributing to other multiemployer plans for the future service benefits of
its hourly employees. These contributions are expensed monthly. In accordance with the PBGC Agreement, on the Effective Date, Anchor paid
$20,750 to the PBGC (with proceeds from the Reorganization). Additionally,
Anchor granted the PBGC a warrant for the purchase of common stock of Anchor,
which was subsequently repurchased in 2003. Also, under the PBGC Agreement,
Anchor makes monthly payments to the PBGC of $833 through 2012. The present
value of this obligation at December 31, 2003, $60,640 recorded as long-term
debt (less current maturities), was determined by applying a discount rate of
8.9%. The rate was determined by management and reviewed by independent
appraisers. The Company adjusted previously recorded pension liabilities to
amounts required under the PBGC Agreement, resulting in a gain of $8,233,
included as a reduction of the cost of the restructuring in the eight months
ended August 31, 2002. F-29




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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data) The Anchor defined benefit plan covered salaried and hourly-paid
employees. Benefits were calculated on a service-based formula for hourly
participants. Benefits were calculated on a salary-based formula for salaried
participants and were frozen in 1994. The Company provides other 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. As part of the Reorganization, the Company implemented
modifications to its current post-retirement benefits program, resulting in a
reduction of long-term post retirement liabilities of $24,432. For the year ended December 31, 2001, the accounting followed by Anchor
for the MEPP, and the disclosures here, reflected the plan as if it were a
single employer plan. The components of net periodic benefit costs follows: Pensions
    
    Post-retirementYear
    
    Four Months
    
    Eight Months
    
    YearYear Ended
    
    Ended
    
    Ended
    
    Ended
    
    EndedDecember 31,
    
    December 31,
    
    December 31,
    
    August 31,
    
    December 31,2001
    
    2003
    
    2002
    
    2002
    
    2001Service cost-benefits
earned during the year
    
    $
    4,600
    
    
    $
    463
    
    
    $
    134
    
    
    $
    671
    
    
    $
    910Interest cost on projected
benefit obligation
    
    
    33,706
    
    
    
    3,607
    
    
    
    1,002
    
    
    
    2,700
    
    
    
    4,297Return on plan assets
    
    
    (35,460
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of:Actuarial gains
    
    
    
    
    
    
    529
    
    
    
    
    
    
    
    (511
    )
    
    
    (378
    )Prior service cost
    
    
    3,263
    
    
    
    
    
    
    
    
    
    
    
    292
    
    
    
    438Total periodic benefit cost
    
    $
    6,109
    
    
    $
    4,599
    
    
    $
    1,136
    
    
    $
    3,152
    
    
    $
    5,267
 Significant assumptions used in determining net periodic benefit cost and
related obligations for the plans are as follows: Pensions
    
    Post-retirementYear
    
    Four Months
    
    Eight Months
    
    YearYear Ended
    
    Ended
    
    Ended
    
    Ended
    
    EndedDecember 31,
    
    December 31,
    
    December 31,
    
    August 31,
    
    December 31,2001
    
    2003
    
    2002
    
    2002
    
    2001Discount rate
    
    
    7.25
    %
    
    
    6.25
    %
    
    
    6.75
    %
    
    
    7.00
    %
    
    
    7.25
    %Expected long-term
rate of return on
plan assets
    
    
    9.50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 During the year ended December 31, 2003 and the four months ended December
31, 2002, the Company contributed $5,179 and $1,615, respectively, to the
multiemployer pension plans in which it participates. These amounts are
expensed as incurred. During the eight months ended August 31, 2002, the
Company contributed $6,001 to the MEPP and the other multiemployer pension
plans. Prior to the PBGC Agreement, the Company had unfunded obligations related
to its employee pension plans. The Retirement Protection Act of 1994 required
the Company to make significant additional funding contributions into its
underfunded defined benefit retirement plans, under certain conditions, and
increased the premiums paid to the PBGC. There were no required pension
contributions in the year ended December 31, 2001 with respect to either
current funding or past underfundings. The Company funded a voluntary
contribution of approximately $7,400 in 2001, the effect of which was to limit
contributions in the then immediate future. F-30




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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data) The funded status of the Companys post-retirement plan is as follows: Pensions
    
    Post-retirementDecember 31,
    
    December 31,
    
    December 31,
    
    August 31,
    
    December 31,2001
    
    2003
    
    2002
    
    2002
    
    2001Change in benefit obligation:Benefit obligation at beginning
of period
    
    $
    455,187
    
    
    $
    44,363
    
    
    $
    43,510
    
    
    $
    61,449
    
    
    $
    55,497Service cost
    
    
    4,600
    
    
    
    463
    
    
    
    134
    
    
    
    671
    
    
    
    910Interest cost
    
    
    33,706
    
    
    
    3,607
    
    
    
    1,002
    
    
    
    2,700
    
    
    
    4,297Plan modifications
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,432
    )
    
    
    Plan participants
contributions
    
    
    
    
    
    
    1,006
    
    
    
    140
    
    
    
    334
    
    
    
    577Actuarial (gain) loss
    
    
    16,215
    
    
    
    12,956
    
    
    
    621
    
    
    
    5,188
    
    
    
    3,664Benefits paid
    
    
    (34,745
    )
    
    
    (4,597
    )
    
    
    (1,044
    )
    
    
    (2,400
    )
    
    
    (3,496
    )Benefit obligation at end of
period
    
    
    474,963
    
    
    
    57,798
    
    
    
    44,363
    
    
    
    43,510
    
    
    
    61,449Change in plan assets:Fair value of plan assets at
beginning of period
    
    
    390,154
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Actual return on plan assets
    
    
    (8,188
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Employer contributions
    
    
    7,801
    
    
    
    3,591
    
    
    
    904
    
    
    
    2,066
    
    
    
    2,919Plan participants
contributions
    
    
    
    
    
    
    1,006
    
    
    
    140
    
    
    
    334
    
    
    
    577Benefits and expenses paid
    
    
    (37,345
    )
    
    
    (4,597
    )
    
    
    (1,044
    )
    
    
    (2,400
    )
    
    
    (3,496
    )Fair value of plan assets at
end of period
    
    
    352,422
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Funded status
    
    
    (122,541
    )
    
    
    (57,798
    )
    
    
    (44,363
    )
    
    
    (43,510
    )
    
    
    (61,449
    )Unrecognized actuarial (gain)
loss
    
    
    75,468
    
    
    
    13,051
    
    
    
    621
    
    
    
    
    
    
    
    (7,812
    )Unrecognized prior service cost
    
    
    22,559
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,406Net amount recognized
    
    
    (24,514
    )
    
    
    (44,747
    )
    
    
    (43,742
    )
    
    
    (43,510
    )
    
    
    (66,855
    )Accrued benefit liability
    
    
    (24,514
    )
    
    
    (44,747
    )
    
    
    (43,742
    )
    
    
    (43,510
    )
    
    
    (66,855
    )Additional minimum pension
liability
    
    
    (98,027
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Intangible pension asset
    
    
    22,559
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated other
comprehensive loss
    
    
    75,468
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net amount recognized
    
    $
    (24,514
    )
    
    $
    (44,747
    )
    
    $
    (43,742
    )
    
    $
    (43,510
    )
    
    $
    (66,855
    )
 The assumed healthcare cost trend used in measuring the accumulated
post-retirement benefit obligation as of December 31, 2003 was 12.0% declining
gradually to 4.5% by the year 2014, after which it remains constant. A one
percentage point increase in the assumed healthcare cost trend rate for each
year would increase the accumulated post-retirement benefit obligation as of
December 31, 2003 by $4,854 and the net post-retirement healthcare cost for the
year ended December 31, 2003 by $349. A one percentage point decrease in the
assumed healthcare cost trend rate for each year would decrease the accumulated
post-retirement benefit obligation as of December 31, 2003 by a $4,242 and the
net post-retirement healthcare cost for the year ended December 31, 2003 by
$303. The Company also contributes to a multi-employer trust that provides
certain other post-retirement benefits to retired hourly employees. Expenses
under this program for the year ended December 31, 2003, the four months ended
December 31, 2002, the eight months ended August 31, 2002 and the year ended
December 31, 2001 were $3,940, $1,283, $2,631 and $3,906, respectively. F-31




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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data) The Company continues to maintain a separate non-qualified benefit plan
covering certain former salaried employees of the former Anchor Glass. The
benefit obligation at December 31, 2003 was $4,145 and is recorded in other
long-term liabilities. The periodic benefit cost for the year ended December
31, 2003, the four months ended December 31, 2002 and the eight months ended
August 31, 2002 was $300, $100 and $200, respectively. Amounts related to this
plan for 2001 are included in the tables above. The Company also sponsors two defined contribution plans covering
substantially all salaried and hourly employees. The Company matches 100% of
employee contributions, not to exceed 6% of participant eligible compensation
or 25% (amended to 35% effective April 1, 2003) of employee contributions, not
to exceed 10% of participant eligible compensation. Expenses under the savings
programs for the year ended December 31, 2003, the four months ended December
31, 2002, the eight months ended August 31, 2002 and the year ended December
31, 2001 were $3,057, $874, $1,759 and $2,572, respectively. In the 1987 acquisition of Diamond-Bathurst, Inc., Anchor assumed the
liabilities under a deferred compensation arrangement with certain employees of
the acquired company. Under this plan, Anchor funds certain benefits to the
participants and will be reimbursed through proceeds received on life insurance
policies carried on all participants. At December 31, 2003 and 2002, plan
assets of $1,625 and $1,427, respectively, are included in other assets and
plan liabilities of $2,068 and $2,419, respectively, are included in
liabilities. NOTE 12  Leases The Company leases distribution and office facilities (including its
headquarters facility), machinery, transportation, data processing and office
equipment under non-cancelable leases that expire at various dates through
2014. These leases generally provide for fixed rental payments and include
renewal and purchase options at amounts that are generally based on fair market
value at expiration of the lease. The Company includes capital leases in other
long-term debt (see Note 6). Future minimum lease payments under non-cancelable operating leases are as
follows: 2004
    
    $
    5,4002005
    
    
    4,5102006
    
    
    3,9302007
    
    
    3,0102008
    
    
    2,600After 2008
    
    
    8,340$
    27,790
 Rental expense for all operating leases for the year ended December 31,
2003, the four months ended December 31, 2002, the eight months ended August
31, 2002 and the year ended December 31, 2001 were $6,998, $5,429, $11,060 and
$15,400, respectively. F-32




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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data) NOTE 13  Income Taxes The Company applies SFAS 109 under which the liability method is used in
accounting for income taxes. Under SFAS 109, if on the basis of available
evidence, it is more likely than not that all or a portion of the deferred tax
asset will not be realized, the asset must be reduced by a valuation allowance.
Since realization is not assured as of December 31, 2003 and 2002, management
has deemed it appropriate to establish a valuation allowance against the net
deferred tax assets. For tax reporting purposes, the consummation of the Companys Plan did not
create a new tax reporting entity. However, as a result of the consummation of
the Plan, the Company has undergone a change in ownership. Due to this change
in ownership, Section 382 of the Internal Revenue Code will significantly limit
the Companys net operating loss carryforwards. In accordance with SOP 90-7,
these net operating loss carryforwards and related valuation allowances have
been revalued. Any tax benefit derived from the release of the valuation
allowances related to fresh start reporting will be accounted for as a credit
to intangible assets, and then additional paid in capital. The Company has approximately $223,000 of unused net operating loss
carryforwards expiring at various dates between 2013 through 2023. These
carryforwards have been adjusted to reflect the projected maximum utilization
under Section 382. The significant components of the deferred tax assets and liabilities are
as follows: December 31,2003
    
    2002Deferred tax assets:Reserves and allowances
    
    $
    10,600
    
    
    $
    14,600Pension and post-retirement liabilities
    
    
    42,900
    
    
    
    41,900Inventory uniform capitalization
    
    
    3,200
    
    
    
    400Tax loss carryforwards
    
    
    88,100
    
    
    
    51,300144,800
    
    
    
    108,200Deferred tax liabilities:Accumulated depreciation and amortization
    
    
    51,500
    
    
    
    57,100Other current assets
    
    
    2,000
    
    
    
    90053,500
    
    
    
    58,000Net deferred tax assets
    
    
    91,300
    
    
    
    50,200Valuation allowance
    
    
    (91,300
    )
    
    
    (50,200
    )Net deferred tax assets after valuation allowance
    
    $
    
    
    
    $
    
 The effective tax rate reconciliation is as follows: Year
    
    Four Months
    
    Eight Months
    
    YearEnded
    
    Ended
    
    Ended
    
    EndedDecember 31,
    
    December 31,
    
    August 31,
    
    December 31,2003
    
    2002
    
    2002
    
    2001Federal rate
    
    
    (34
    )%
    
    
    (34
    )%
    
    
    34
    %
    
    
    (34
    )%State rate
    
    
    (5
    )
    
    
    (5
    )
    
    
    5
    
    
    
    (5
    )Non-deductible goodwill write-off
    
    
    
    
    
    
    
    
    
    
    27
    
    
    
    Non-deductible professional fees.
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    Other permanent differences
    
    
    1
    
    
    
    15
    
    
    
    1
    
    
    
    3(38
    )
    
    
    (24
    )
    
    
    73
    
    
    
    (36
    )Valuation allowance
    
    
    38
    
    
    
    24
    
    
    
    (73
    )
    
    
    36Effective rate
    
    
    
    %
    
    
    
    %
    
    
    
    %
    
    
    
    %
 F-33




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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data) NOTE 14  Commitments and Contingencies Certain environmental laws, such as CERCLA or Superfund and analogous
state laws, provide for strict, under certain circumstances, joint and several
liability for investigation and remediation of releases of hazardous substances
into the environment. Such laws may apply to properties presently or formerly
owned or operated by an entity or its predecessors, as well as to conditions at
properties at which wastes attributable to an entity or its predecessors were
disposed. The Company is engaged in investigation and remediation projects at
plants currently being operated and at closed facilities. In addition, Anchor
has been identified as a potentially responsible party (a PRP) under CERCLA
with respect to two sites. While the Company may be jointly and severally
liable for costs related to these sites, it is only one of a number of PRPs
who also may be jointly and severally liable. The Company has established
reserves for environmental costs which it believes are adequate to address the
anticipated costs of remediation of these operating and closed facilities and
its liability as a PRP under CERCLA. The timing and magnitude of such costs
cannot always be determined with certainty due to, among other things,
incomplete information with respect to environmental conditions at certain
sites, new and amended environmental laws and regulations, and uncertainties
regarding the timing of remedial expenditures. The Companys operations are subject to 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. Based on the Companys current
understanding of the relevant facts, the Company does not believe that its
environmental exposure is in excess of the reserves reflected on the balance
sheet, although there can be no assurance that this will be the case. The
Company maintains environmental reserves of approximately $9,200. In addition
to the environmental reserves, the Company carries an environmental impairment
liability insurance policy (expiring August 30, 2007) to address certain
potential future environmental liabilities at identified operating and
non-operating sites. There can be no assurance, however, that insurance will be
available or adequate to cover future liabilities. Average annual spending on
remediation issues in recent years approximated $500. 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 any 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. Legal expenses incurred related to these contingencies
are generally expensed as incurred. F-34




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##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(dollars in thousands, except per share data) Quarterly Financial Information  Unaudited 2003 Quarters EndedMarch 31,
    
    June 30,
    
    September 30,
    
    December 31,Net sales
    
    $
    162,403
    
    
    $
    186,822
    
    
    $
    193,546
    
    
    $
    167,172Cost of products sold
    
    
    152,927
    
    
    
    168,062
    
    
    
    178,312
    
    
    
    161,101Selling and administrative expenses
    
    
    6,646
    
    
    
    6,820
    
    
    
    6,627
    
    
    
    6,870Income (loss) from operations
    
    
    2,830
    
    
    
    11,940
    
    
    
    8,607
    
    
    
    (799
    )Other income (expense), net
    
    
    (588
    )
    
    
    364
    
    
    
    (1,192
    )
    
    
    1,260Interest expense
    
    
    (14,131
    )
    
    
    (11,007
    )
    
    
    (11,667
    )
    
    
    (11,744
    )Net income (loss)
    
    $
    (11,889
    )
    
    $
    1,297
    
    
    $
    (4,252
    )
    
    $
    (11,283
    )Basic and diluted net income (loss) per share
applicable to common stock
    
    $
    (1.05
    )
    
    $
    (0.08
    )
    
    $
    (3.20
    )
    
    $
    (0.46
    )
 2002Quarter
    
    Quarter
    
    Two months
    
    One month
    
    QuarterEnded
    
    Ended
    
    Ended
    
    Ended
    
    EndedMarch 31,
    
    June 30,
    
    August 31,
    
    September 30,
    
    December 31,Net sales
    
    $
    178,382
    
    
    $
    199,878
    
    
    $
    125,935
    
    
    $
    54,480
    
    
    $
    156,899Cost of products sold
    
    
    164,572
    
    
    
    176,099
    
    
    
    110,948
    
    
    
    50,447
    
    
    
    141,987Selling and administrative
expenses
    
    
    7,693
    
    
    
    7,531
    
    
    
    4,038
    
    
    
    1,942
    
    
    
    7,741Restructuring, net
    
    
    
    
    
    
    1,429
    
    
    
    (1,824
    )
    
    
    
    
    
    
    Income from operations
    
    
    6,117
    
    
    
    14,819
    
    
    
    12,773
    
    
    
    2,091
    
    
    
    7,171Reorganization items, net
    
    
    
    
    
    
    (2,700
    )
    
    
    50,089
    
    
    
    
    
    
    
    Other income (expense),
net
    
    
    863
    
    
    
    (380
    )
    
    
    190
    
    
    
    445
    
    
    
    5Interest expense
    
    
    (7,183
    )
    
    
    (6,791
    )
    
    
    (3,974
    )
    
    
    (2,571
    )
    
    
    (7,810
    )Net income (loss)
    
    $
    (203
    )
    
    $
    4,948
    
    
    $
    59,078
    
    
    $
    (35
    )
    
    $
    (634
    )Basic net income (loss) per
share applicable to common
stock
    
    $
    (0.71
    )
    
    $
    0.83
    
    
    $
    11.25
    
    
    $
    (0.06
    )
    
    $
    (0.22
    )Diluted net income (loss)
per share applicable to
common stock
    
    $
    (0.71
    )
    
    $
    0.15
    
    
    $
    1.75
    
    
    $
    (0.06
    )
    
    $
    (0.22
    )
 F-35




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##### Table of Contents



SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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: March 18, 2004
    By:
    /s/ Darrin J. CampbellDarrin J. Campbell


Chief Financial Officer and


Executive Vice President Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated. /s/ Joel A. AsenJoel A. AsenDirector
    
    March 18, 2004/s/ Darrin J. CampbellDarrin J. CampbellChief Financial OfficerPrincipal Accounting Officer
    
    March 18, 2004/s/ James N. ChapmanJames N. ChapmanDirector
    
    March 18, 2004/s/ Richard M. DeneauRichard M. DeneauDirectorChief Executive Officer
    
    March 18, 2004/s/ Jonathan GallenJonathan GallenDirector
    
    March 18, 2004/s/ George HamiltonGeorge HamiltonDirector
    
    March 18, 2004/s/ Timothy F. PriceTimothy F. PriceDirector
    
    March 18, 2004/s/ Alan H. SchumacherAlan H. SchumacherDirectorChairman of the Board
    
    March 18, 2004/s/ Lenard B. TesslerLenard B. TesslerDirector
    
    March 18, 2004