EX-99.1 2 ex991.htm EXHIBIT 99.1 Ex99.1

Exhibit 99.1
Libbey Inc.
300 Madison Ave
P.O. Box 10060
Toledo, OH 43699
 
 
NEWS RELEASE

INVESTOR CONTACT:
 
MEDIA CONTACT:
Kenneth Boerger
 
Daniel Brady
Vice President and Treasurer, Libbey Inc.
 
Vice President, Reputation Partners
(419) 325-2279
 
(312) 447-2560
ken.boerger@libbey.com
 
dan@reputationpartners.com
    

FOR IMMEDIATE RELEASE
THURSDAY, FEBRUARY 21, 2013         


LIBBEY INC. ANNOUNCES RECORD FULL-YEAR 2012 RESULTS; ALSO ANNOUNCES INTENT TO REDEEM $45.0 MILLION OF ITS 6.875 PERCENT SENIOR SECURED NOTES DUE 2020 AND TENTATIVE REALIGNMENT OF NORTH AMERICAN PRODUCTION


•
Fourth Quarter Included Sales of $219.1 Million, Income from Operations of $13.1 Million and Adjusted EBITDA of $29.9 Million
•
Free Cash Flow Generation of $36.7 Million in the Fourth Quarter of 2012
•
Working Capital as a Percentage of Last Twelve Months' Sales was an All-Time Record Low 20.9 Percent
•
Debt Net of Cash Reduced to $398.9 Million, Resulting in Net Debt to Adjusted EBITDA of 3.0 Times
•
Company Announces Tentative Plans to Realign Production and Reduce Capacity in Shreveport Facility to Further Improve Cost Structure
 

TOLEDO, OHIO, FEBRUARY 21, 2013--Libbey Inc. (NYSE MKT: LBY) reported results today for the fourth quarter of 2012 and the full year.

Fourth-Quarter Highlights

•
Sales for the fourth quarter were $219.1 million, compared to $214.8 million for the fourth quarter of 2011, an increase of 2.0 percent (1.9 percent excluding currency fluctuation).

•
Sales in the Glass Operations segment were $201.3 million, compared to $199.2 million in the fourth quarter of 2011, an increase of 1.1 percent (0.9 percent excluding currency fluctuation). Sales performance was led by a 5.0 percent increase in sales within our U.S. and Canada sales region.

•
Income from operations grew 34.8 percent, compared to the fourth quarter of 2011, increasing to $13.1 million from $9.7 million in the year-ago quarter.

 
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•
Adjusted EBITDA increased 40.2 percent to $29.9 million, the highest fourth-quarter adjusted EBITDA since 2007. In the fourth quarter of 2011, adjusted EBITDA was $21.3 million.

“We are pleased with this quarter's results, driven in large part by the increased focus on improving margins and defending and growing our business in our key markets, the core of our recently announced strategic plan. Our cost improvements, coupled with solid sales growth in the U.S. and Canada sales region, led to exceptionally strong adjusted EBITDA. Four strong quarters propelled us to 2012 full year results that included all-time records in sales, income from operations and adjusted EBITDA," said Stephanie A. Streeter, chief executive officer of Libbey Inc. “Our commitment to improving our cost structure, leveraging our advantaged businesses and strengthening our balance sheet was reflected in our results. We will continue efforts to improve our cost structure. We believe these efforts, in combination with our overall productivity improvements, will enable strengthened financial and operational performance in 2013.”

Fourth-Quarter Regional Sales and Operational Review

•
Glass Operations segment sales were led by a 5.0 percent increase in sales within our U.S. and Canada sales region and a 0.8 percent increase in sales within our China sales region (sales were essentially unchanged during the quarter excluding currency impact). Sales within our Mexico sales region were lower by 5.6 percent, compared to the prior-year quarter (lower by 9.3 percent excluding the impact of currency). The European sales region saw a 3.1 percent decrease in sales (a 0.8 percent increase excluding currency fluctuation).

•
Sales to U.S. and Canadian foodservice glassware customers increased by 4.0 percent. Glassware sales to U.S. and Canadian retail customers increased 6.5 percent during the fourth quarter of 2012, while sales to business-to-business customers in the U.S. and Canada increased 3.7 percent.

•
Sales in the Other Operations segment increased 13.4 percent to $17.8 million, compared to $15.7 million in the prior-year quarter. This increase was driven by solid sales increases to both Syracuse China and World Tableware customers during the quarter.

•
Interest expense decreased by $1.9 million to $8.6 million, compared to $10.5 million in the year-ago period, primarily driven by lower interest rates.

•
Our effective tax rate was 67.7 percent for the quarter-ended December 31, 2012, compared to a benefit of 296.6 percent for the quarter-ended December 31, 2011. The effective tax rate was influenced by non-deductible foreign currency differences, an increase in foreign withholding taxes in jurisdictions with recorded valuation allowances, activity in jurisdictions with recorded valuation allowances, and changes in the mix of earnings with differing statutory rates.

Twelve-Month Highlights

•
Full-year sales for 2012 were $825.3 million, compared to $817.1 million in 2011, an increase of 1.0 percent (or 3.1 percent excluding currency fluctuation).

•
Sales in the Glass Operations segment were $753.0 million, compared to $746.6 million in 2011, an increase of 0.9 percent (3.1 percent excluding currency fluctuation). Contributing to the increase was a 24.0 percent increase in sales within our China sales region (21.3 percent excluding currency impact) and a 4.1 percent increase in our U.S. and Canada sales region.

•
Income from operations in 2012 grew 28.1 percent, compared to the full year 2011, increasing to $81.3 million from $63.5 million in 2011.

 
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•
Adjusted EBITDA increased 17.1 percent to an all-time high for any year of $132.4 million, compared to $113.1 million for 2011.

Twelve-Month Regional Sales and Operational Review

•
Primary contributors to increased Glass Operations sales were a 24.0 percent increase in sales within our China sales region (21.3 percent excluding currency impact) and a 4.1 percent increase in sales within our U.S. and Canada sales region. We reported sales that were 1.6 percent lower within our Mexico sales region; however, excluding currency impact, net sales in the Mexico sales region were 3.1 percent higher compared to the prior year. We saw an 8.3 percent decrease in sales within our European sales region (only a 0.6 percent decrease excluding currency fluctuation).

•
Sales to U.S. and Canadian foodservice glassware customers increased by 5.1 percent. Glassware sales to U.S. and Canadian retail customers increased 3.6 percent during 2012, while sales to business-to-business customers in the U.S. and Canada were 3.1 percent higher.

•
Sales in the Other Operations segment were $73.0 million, compared to $71.2 million in the prior year. The prior year included net sales of $4.8 million of Traex® products that, as a result of the sale of substantially all of the assets of Traex in April 2011, were no longer offered for sale by the Company in 2012. More than offsetting the absence of Traex® product sales in 2012 were increased sales to World Tableware customers of 9.0 percent and an even stronger 12.6 percent increase in sales to Syracuse China customers.

•
Interest expense decreased by $5.7 million to $37.7 million, compared to $43.4 million in the prior year, the result of lower interest rates in the last seven months of the year.

•
Our effective tax rate was 45.0 percent for the year-ended December 31, 2012, compared to 6.5 percent in 2011. The effective tax rate was heavily influenced by non-deductible foreign currency losses related to our Mexican operations, an increase in foreign withholding taxes in jurisdictions with recorded valuation allowances, activity in jurisdictions with recorded valuation allowances and changes in the mix of earnings with differing statutory rates.

Working Capital and Liquidity

•
As of December 31, 2012, working capital, defined as inventories and accounts receivable less accounts payable, was $172.7 million, compared to $175.1 million at December 31, 2011. This decrease in working capital was primarily the result of lower accounts receivable and higher accounts payable.

•
Libbey reported that it had available capacity of $68.6 million under its ABL credit facility as of December 31, 2012, with no loans currently outstanding. The Company also had cash on hand of $67.2 million at December 31, 2012.

Partial Redemption of Senior Notes

Libbey Inc. announced that its wholly owned subsidiary Libbey Glass Inc. intends to call for redemption, during the second quarter of 2013, an aggregate principal amount of $45.0 million of its outstanding 6.875 percent Senior Secured Notes Due 2020 (the “Notes”), on a pro rata basis in accordance with the terms of the indenture agreement dated May 15, 2012 (the “Indenture”). Pursuant to the terms of the Indenture, the redemption price for the Notes will be 103.0 percent of the principal amount of the redeemed Notes, plus accrued and unpaid interest. Following completion of the redemption, the aggregate principal amount of the Notes that will remain outstanding will be $405.0 million.


 
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A formal notice of redemption will be sent separately to the holders of the Notes, in accordance with the terms of the Indenture. The Company plans to fund this redemption using cash on its balance sheet and, if needed, borrowings under its ABL credit agreement.

Stephanie A. Streeter, Libbey's chief executive officer, said, “We are pleased that, as a result of our outstanding free cash flow generation in 2012, we are in a position to reduce our outstanding senior note debt by $45 million. We continue to make significant progress in our ongoing efforts to reduce our leverage.”

Tentative Realignment of North American Production

As part of its ongoing efforts to improve Libbey's cost structure and overall financial position, the Company today also announced a tentative plan to exit sales of certain glassware items, realign production in North America and reduce its manufacturing capacity at its Shreveport, LA, facility.  The tentative plan will be further discussed with the United Steelworkers (USW), which represents Libbey production and maintenance employees in Shreveport.  The realignment, if implemented as currently contemplated, would result in a reduction in Shreveport affecting approximately 200 positions. Some production would be relocated to Libbey's facilities in Toledo, Ohio, and Monterrey, Mexico. Existing staff would handle the relocated production in Toledo and Monterrey.  The vast majority of Libbey customers would not be impacted.

“These changes would enable Libbey to reduce manufacturing capacity and improve asset utilization across our North American facilities, while continuing to meet the needs of our customers worldwide,” Streeter said. “We regret the impact these changes would have on our affected Shreveport associates, but they are necessary to strengthen Libbey's financial and competitive position.”

Webcast Information

Libbey will hold a conference call for investors on Thursday, February 21, 2013, at 11 a.m. Eastern Standard Time. The conference call will be simulcast live on the Internet and is accessible from the Investor Relations section of www.libbey.com. To listen to the call, please go to the website at least 10 minutes early to register, download and install any necessary software. A replay will be available for seven days after the conclusion of the call.

About Libbey Inc.

Based in Toledo, Ohio, since 1888, Libbey Inc. is the largest manufacturer of glass tableware in the western hemisphere and one of the largest glass tableware manufacturers in the world. It supplies products to foodservice, retail, industrial and business-to-business customers in over 100 countries, and it is the leading manufacturer of tabletop products for the U.S. foodservice industry.

Libbey operates glass tableware manufacturing plants in the United States in Louisiana and Ohio as well as in Mexico, China, Portugal and the Netherlands. Its Crisa subsidiary, located in Monterrey, Mexico, is a leading producer of glass tableware in Mexico and Latin America. Its subsidiary located in Leerdam, Netherlands, is among the world leaders in producing and selling glass stemware to retail, foodservice and industrial clients. Its Crisal subsidiary, located in Portugal, provides an expanded presence in Europe. Its Syracuse China subsidiary designs and distributes an extensive line of high-quality ceramic dinnerware, principally for foodservice establishments in the United States. Its World Tableware subsidiary imports and sells a full-line of metal flatware and hollowware and an assortment of ceramic dinnerware and other tabletop items principally for foodservice establishments in the United States. In 2012, Libbey Inc.'s net sales totaled $825.3 million.

 
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This press release includes forward-looking statements as defined in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements reflect only the Company's best assessment at this time and are indicated by words or phrases such as “goal,” “expects,” “ believes,” “will,” “estimates,” “anticipates,” or similar phrases. Investors are cautioned that forward-looking statements involve risks and uncertainty and that actual results may differ materially from these statements, and that investors should not place undue reliance on such statements. These forward-looking statements may be affected by the risks and uncertainties in the Company's business. This information is qualified in its entirety by cautionary statements and risk factor disclosures contained in the Company's Securities and Exchange Commission filings, including the Company's report on Form 8-K filed with the Commission on May 9, 2012. Important factors potentially affecting performance include but are not limited to increased competition from foreign suppliers endeavoring to sell glass tableware in the United States and Mexico; the impact of lower duties for imported products; global economic conditions and the related impact on consumer spending levels; major slowdowns in the retail, travel or entertainment industries in the United States, Canada, Mexico, Western Europe and Asia, caused by terrorist attacks or otherwise; significant increases in per-unit costs for natural gas, electricity, freight, corrugated packaging, and other purchased materials; high levels of indebtedness; high interest rates that increase the Company's borrowing costs or volatility in the financial markets that could constrain liquidity and credit availability; protracted work stoppages related to collective bargaining agreements; increases in expense associated with higher medical costs, increased pension expense associated with lower returns on pension investments and increased pension obligations; devaluations and other major currency fluctuations relative to the U.S. dollar and the Euro that could reduce the cost competitiveness of the Company's products compared to foreign competition; the effect of high inflation in Mexico and exchange rate changes to the value of the Mexican peso and the earnings and cash flow of Libbey Mexico, expressed under U.S. GAAP; the inability to achieve savings and profit improvements at targeted levels in the Company's operations or within the intended time periods; and whether the Company completes any significant acquisition and whether such acquisitions can operate profitably. Any forward-looking statements speak only as of the date of this press release, and the Company assumes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date of this press release.




 
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Libbey Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per-share amounts)
(unaudited)

 
Three months ended December 31,
 
2012
 
2011
Net sales
$
219,061

 
$
214,782

Freight billed to customers
683

 
636

Total revenues
219,744

 
215,418

Cost of sales (1)
175,171

 
177,545

Gross profit
44,573

 
37,873

Selling, general and administrative expenses (1)
31,505

 
28,180

Income from operations
13,068

 
9,693

Other income (expense)(1)
547

 
(276
)
Earnings before interest and income taxes
13,615

 
9,417

Interest expense
8,642

 
10,490

Income (loss) before income taxes
4,973

 
(1,073
)
Provision for (benefit from) income taxes
3,366

 
(3,182
)
Net income
$
1,607

 
$
2,109

 
 
 
 
Net income per share:
 
 
 
Basic
$
0.08

 
$
0.10

Diluted
$
0.07

 
$
0.10

 
 
 
 
Weighted average shares:
 
 
 
Outstanding
20,999

 
20,437

Diluted
21,555

 
20,860


(1) Refer to Table 1 for Special Items detail.



Libbey Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per-share amounts)
(unaudited)

 
Year ended December 31,
 
2012
 
2011
Net sales
$
825,287

 
$
817,056

Freight billed to customers
3,165

 
2,396

Total revenues
828,452

 
819,452

Cost of sales (1)
633,267

 
650,713

Gross profit
195,185

 
168,739

Selling, general and administrative expenses (1)
113,896

 
105,545

Special charges (1)
—

 
(281
)
Income from operations
81,289

 
63,475

Loss on redemption of debt (1)
(31,075
)
 
(2,803
)
Other income(1)
188

 
8,031

Earnings before interest and income taxes
50,402

 
68,703

Interest expense
37,727

 
43,419

Income before income taxes
12,675

 
25,284

Provision for income taxes (1)
5,709

 
1,643

Net income
$
6,966

 
$
23,641

 
 
 
 
Net income per share:
 
 
 
Basic
$
0.33

 
$
1.17

Diluted
$
0.33

 
$
1.14

 
 
 
 
Weighted average shares:
 
 
 
Outstanding
20,876

 
20,170

Diluted
21,315

 
20,808


(1) Refer to Table 2 for Special Items detail.



Libbey Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)



 
December 31, 2012
 
December 31, 2011
 
(unaudited)
 
 
ASSETS:
 
 
 
Cash and cash equivalents
$
67,208

 
$
58,291

Accounts receivable — net
80,850

 
88,045

Inventories — net
157,549

 
145,859

Other current assets
13,716

 
15,356

Total current assets
319,323

 
307,551

 
 
 
 
Pension asset
10,196

 
17,485

Goodwill and purchased intangibles — net
186,794

 
187,772

Property, plant and equipment — net
258,154

 
264,718

Other assets
32,618

 
28,881

Total assets
$
807,085

 
$
806,407

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
 
 
 
Notes payable
$
—

 
$
339

Accounts payable
65,712

 
58,759

Accrued liabilities
84,268

 
88,761

Pension liability (current portion)
613

 
5,990

Non-pension postretirement benefits (current portion)
4,739

 
4,721

Other current liabilities
6,634

 
7,340

Long-term debt due within one year
4,583

 
3,853

Total current liabilities
166,549

 
169,763

 
 
 
 
Long-term debt
461,884

 
393,168

Pension liability
60,909

 
122,145

Non-pension postretirement benefits
71,468

 
68,496

Other liabilities
21,799

 
25,055

Total liabilities
782,609

 
778,627

 
 
 
 
Common stock and capital in excess of par value
313,586

 
311,188

Retained deficit
(148,070
)
 
(155,036
)
Accumulated other comprehensive loss
(141,040
)
 
(128,372
)
Total shareholders’ equity
24,476

 
27,780

Total liabilities and shareholders’ equity
$
807,085

 
$
806,407




Libbey Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)

 
Three months ended December 31,
 
2012
 
2011
Operating activities:
 
 
 
Net income
$
1,607

 
$
2,109

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
10,574

 
9,923

Loss on asset sales and disposals
152

 
508

Change in accounts receivable
13,684

 
4,889

Change in inventories
14,128

 
23,935

Change in accounts payable
18,372

 
7,586

Accrued interest and amortization of discounts, warrants and finance fees
(6,965
)
 
9,356

Pension & non-pension postretirement benefits
4,994

 
(488
)
Accrued liabilities & prepaid expenses
(7,420
)
 
(2,965
)
Income taxes
2,669

 
(4,032
)
Share-based compensation expense
855

 
651

Other operating activities
(523
)
 
1,735

Net cash provided by operating activities
52,127

 
53,207

 
 
 
 
Investing activities:
 
 
 
Additions to property, plant and equipment
(15,476
)
 
(14,963
)
Net proceeds from sale of Traex
—

 
(522
)
Proceeds from asset sales and other
97

 
(42
)
Net cash used in investing activities
(15,379
)
 
(15,527
)
 
 
 
 
Financing activities:
 
 
 
Other repayments
(3,603
)
 
(9,338
)
Other borrowings
—

 
365

Proceeds from exercise of warrants
—

 
5,459

Stock options exercised
938

 
4

Debt issuance costs and other
(441
)
 
(1
)
Net cash used in financing activities
(3,106
)
 
(3,511
)
Effect of exchange rate fluctuations on cash
219

 
(461
)
Increase in cash
33,861

 
33,708

Cash & cash equivalents at beginning of period
33,347

 
24,583

Cash & cash equivalents at end of period
$
67,208

 
$
58,291







Libbey Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
 
Year ended December 31,
 
2012
 
2011
Operating activities:
 
 
 
Net income
$
6,966

 
$
23,641

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
41,471

 
42,188

Loss (gain) on asset sales and disposals
446

 
(5,941
)
Change in accounts receivable
7,187

 
3,076

Change in inventories
(10,969
)
 
(221
)
Change in accounts payable
6,285

 
403

Accrued interest and amortization of discounts, warrants and finance fees
(6,433
)
 
3,047

Call premium on 10% senior notes
23,602

 
1,203

Write-off of finance fees & discounts on senior notes and ABL
10,975

 
1,600

Pension & non-pension postretirement benefits
(76,344
)
 
(9,074
)
Restructuring charges
—

 
(828
)
Accrued liabilities & prepaid expenses
322

 
1,917

Income taxes
1,628

 
(11,200
)
Share-based compensation expense
3,321

 
5,016

Other operating activities
40

 
524

Net cash provided by operating activities
8,497

 
55,351

 
 
 
 
Investing activities:
 
 
 
Additions to property, plant and equipment
(32,720
)
 
(41,420
)
Net proceeds from sale of Traex
—

 
12,478

Proceeds from asset sales and other
647

 
5,222

Net cash used in investing activities
(32,073
)
 
(23,720
)
 
 
 
 
Financing activities:
 

 
 

Other repayments
(23,116
)
 
(14,108
)
Other borrowings
1,234

 
365

Proceeds from 6.875% senior notes
450,000

 
—

Payments on 10% senior notes
(360,000
)
 
(40,000
)
Call premium on 10% senior notes
(23,602
)
 
(1,203
)
Proceeds from exercise of warrants
—

 
5,459

Stock options exercised
1,231

 
482

Debt issuance costs and other
(13,475
)
 
(463
)
Net cash provided by (used in) financing activities
32,272

 
(49,468
)
Effect of exchange rate fluctuations on cash
221

 
(130
)
Increase (decrease) in cash
8,917

 
(17,967
)
Cash & cash equivalents at beginning of year
58,291

 
76,258

Cash & cash equivalents at end of year
$
67,208

 
$
58,291






In accordance with the SEC’s Regulation G, tables 1, 2, 3, 4, 5 and 6 provide non-GAAP measures used in this earnings release and a reconciliation to the most closely related Generally Accepted Accounting Principle (GAAP) measure. Libbey believes that providing supplemental non-GAAP financial information is useful to investors in understanding Libbey's core business and trends. In addition, it is the basis on which Libbey's management assesses performance. Although Libbey believes that the non-GAAP financial measures presented enhance investors' understanding of Libbey's business and performance, these non-GAAP measures should not be considered an alternative to GAAP.

Table 1
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of "As Reported" Results to "As Adjusted" Results - Quarter
 
 
(dollars in thousands, except per-share amounts)
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended December 31,
 
 
2012
 
2011
 
 
As Reported
 
Special Items
 
As Adjusted
 
As Reported
 
Special Items
 
As Adjusted
Net sales
 
$
219,061

 
$
—

 
$
219,061

 
$
214,782

 
$
—

 
$
214,782

Freight billed to customers
 
683

 
—

 
683

 
636

 
—

 
636

Total revenues
 
219,744

 
—

 
219,744

 
215,418

 
—

 
215,418

Cost of sales
 
175,171

 
913

 
174,258

 
177,545

 
817

 
176,728

Gross profit
 
44,573

 
(913
)
 
45,486

 
37,873

 
(817
)
 
38,690

Selling, general and administrative expenses
 
31,505

 
4,757

 
26,748

 
28,180

 
1,316

 
26,864

Income from operations
 
13,068

 
(5,670
)
 
18,738

 
9,693

 
(2,133
)
 
11,826

Other income (expense)
 
547

 
—

 
547

 
(276
)
 
179

 
(455
)
Earnings before interest and income taxes
 
13,615

 
(5,670
)
 
19,285

 
9,417

 
(1,954
)
 
11,371

Interest expense
 
8,642

 
—

 
8,642

 
10,490

 
—

 
10,490

Income (loss) before income taxes
 
4,973

 
(5,670
)
 
10,643

 
(1,073
)
 
(1,954
)
 
881

Provision for (benefit from) income taxes
 
3,366

 
—

 
3,366

 
(3,182
)
 
—

 
(3,182
)
Net income
 
$
1,607

 
$
(5,670
)
 
$
7,277

 
$
2,109

 
$
(1,954
)
 
$
4,063

 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.08

 
$
(0.27
)
 
$
0.35

 
$
0.10

 
$
(0.10
)
 
$
0.20

Diluted
 
$
0.07

 
$
(0.26
)
 
$
0.34

 
$
0.10

 
$
(0.09
)
 
$
0.19

 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares:
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding
 
20,999

 
 
 
 
 
20,437

 
 
 
 
Diluted
 
21,555

 
 
 
 
 
20,860

 
 
 
 

 
 
Three months ended December 31, 2012
 
Three months ended December 31, 2011
Special Items Detail
   (income) expense:
 
Pension Curtailment
& Settlement
 
Severance(1)
 
Total Special Items
 
CEO transition
expenses
 
Sale of
Traex (2)
 
Other (3)
 
Total Special Items
Cost of sales
 
$
—

 
$
913

 
$
913

 
$
—

 
$
—

 
$
817

 
$
817

SG&A
 
4,431

 
326

 
4,757

 
211

 
—

 
1,105

 
1,316

Other (income) expense
 
—

 
—

 
—

 
—

 
(179
)
 
—

 
(179
)
Total Special Items
 
$
4,431

 
$
1,239

 
$
5,670

 
$
211

 
$
(179
)
 
$
1,922

 
$
1,954


(1) Relates to implementation of our new strategic plan.
(2) Adjustment to the gain on the sale of substantially all of the assets of Traex.
(3) Cost of sales reflects a write-down of unutilized fixed assets in our Glass Operations segment while SG&A contains severance.


Table 2
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of "As Reported" Results to "As Adjusted" Results - Year
 
 
(dollars in thousands, except per-share amounts)
 
 
 
 
 
 
(unaudited)
 
Year ended December 31,
 
 
2012
 
2011
 
 
As Reported
 
Special Items
 
As Adjusted
 
As Reported
 
Special Items
 
As Adjusted
Net sales
 
$
825,287

 
$
—

 
$
825,287

 
$
817,056

 
$
—

 
$
817,056

Freight billed to customers
 
3,165

 
—

 
3,165

 
2,396

 
—

 
2,396

Total revenues
 
828,452

 
—

 
828,452

 
819,452

 
—

 
819,452

Cost of sales
 
633,267

 
3,255

 
630,012

 
650,713

 
2,841

 
647,872

Gross profit
 
195,185

 
(3,255
)
 
198,440

 
168,739

 
(2,841
)
 
171,580

Selling, general and administrative expenses
 
113,896

 
6,201

 
107,695

 
105,545

 
3,914

 
101,631

Special charges
 
—

 
—

 
—

 
(281
)
 
(281
)
 
—

Income from operations
 
81,289

 
(9,456
)
 
90,745

 
63,475

 
(6,474
)
 
69,949

Loss on redemption of debt
 
(31,075
)
 
(31,075
)
 
—

 
(2,803
)
 
(2,803
)
 
—

Other income
 
188

 
—

 
188

 
8,031

 
7,079

 
952

Earnings before interest and income taxes
 
50,402

 
(40,531
)
 
90,933

 
68,703

 
(2,198
)
 
70,901

Interest expense
 
37,727

 
—

 
37,727

 
43,419

 
—

 
43,419

Income before income taxes
 
12,675

 
(40,531
)
 
53,206

 
25,284

 
(2,198
)
 
27,482

Provision for income taxes
 
5,709

 
(26
)
 
5,735

 
1,643

 
—

 
1,643

Net income
 
$
6,966

 
$
(40,505
)
 
$
47,471

 
$
23,641

 
$
(2,198
)
 
$
25,839

 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.33

 
$
(1.94
)
 
$
2.27

 
$
1.17

 
$
(0.11
)
 
$
1.28

Diluted
 
$
0.33

 
$
(1.90
)
 
$
2.23

 
$
1.14

 
$
(0.11
)
 
$
1.24

 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares:
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding
 
20,876

 
 
 
 
 
20,170

 
 
 
 
Diluted
 
21,315

 
 
 
 
 
20,808

 
 
 
 
 
 
Year ended December 31, 2012
 
Year ended December 31, 2011
Special Items Detail-(income) expense:
 
Finance
Fees (1)
 
Severance(2)
 
Pension Curtailment
& Settlement
 
Total
Special
Items
 
Sale of Land & Traex(3)
 
CEO transition
expenses(4)
 
Finance
Fees (1)
 
Abandoned
Property (5)
 
Other(6)
 
Total
Special
Items
Cost of sales
 
$
—

 
$
3,255

 
$
—

 
$
3,255

 
$
—

 
$
—

 
$
—

 
$
1,827

 
$
1,014

 
$
2,841

SG&A
 
—

 
1,895

 
4,306

 
6,201

 
—

 
2,722

 
—

 
892

 
300

 
3,914

Special charges
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(281
)
 
(281
)
Loss on redemption of debt
 
31,075

 
—

 
—

 
31,075

 
—

 
—

 
2,803

 
—

 
—

 
2,803

Other income
 
—

 
—

 
—

 
—

 
(6,863
)
 
—

 
—

 
—

 
(216
)
 
(7,079
)
Income taxes
 
—

 
(26
)
 
—

 
(26
)
 
—

 
—

 
—

 
—

 
—

 
—

Total Special Items
 
$
31,075

 
$
5,124

 
$
4,306

 
$
40,505

 
$
(6,863
)
 
$
2,722

 
$
2,803

 
$
2,719

 
$
817

 
$
2,198


(1) Finance fees for 2012 include the write-off of unamortized finance fees and discounts and call premium payments on the ABL Facility and $360.0 million senior notes redeemed in May and June 2012, partially offset by the write-off of the debt carrying value adjustment related to the termination of the $80.0 million interest rate swap. Finance fees for 2011 include the write-off of unamortized finance fees and discounts and call premium payments on the $40.0 million senior notes redeemed in March 2011.
(2) Relates to implementation of our new strategic plan.
(3) Net gain on the sale of land at our Libbey Holland facility of $3,445 and net gain on sale of substantially all of the assets of Traex of $3,418.
(4) CEO transition expenses primarily represent non-cash charges related to accelerated vesting of previously issued equity compensation.
(5) Estimate accrued for an on-going unclaimed property audit.
(6) Cost of sales includes $197 of restructuring charges and a $817 write-down of unutilized fixed assets in our Glass Operations segment. SG&A includes severance of $1,105, net of an equipment credit of $805. Special charges relate to the closure of our Syracuse, New York, manufacturing facility and the decorating operations at our Shreveport manufacturing facility.


Table 3
 
 
 
 
 
 
 
 
Reconciliation of Net Income to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA
(dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended December 31,
 
Year ended December 31,
 
 
2012
 
2011
 
2012
 
2011
Reported net income
 
$
1,607

 
$
2,109

 
$
6,966

 
$
23,641

Add:
 
 
 
 
 
 
 
 
Interest expense
 
8,642

 
10,490

 
37,727

 
43,419

Provision for (benefit from) income taxes
 
3,366

 
(3,182
)
 
5,709

 
1,643

Depreciation and amortization
 
10,574

 
9,923

 
41,471

 
42,188

EBITDA
 
24,189

 
19,340

 
91,873

 
110,891

Add: Special items before interest and taxes
 
5,670

 
1,954

 
40,531

 
2,198

Adjusted EBITDA
 
$
29,859

 
$
21,294

 
$
132,404

 
$
113,089



Table 4
 
 
 
 
 
 
 
 
Reconciliation of Net Cash provided by Operating Activities to Free Cash Flow
(dollars in thousands)
 
 
 
 
 
 
 
 
 
 
Three months ended December 31,
 
Year ended December 31,
 
 
2012
 
2011
 
2012
 
2011
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities
 
$
52,127

 
$
53,207

 
$
8,497

 
$
55,351

Capital expenditures
 
(15,476
)
 
(14,963
)
 
(32,720
)
 
(41,420
)
Net proceeds from sale of Traex
 
—

 
(522
)
 
—

 
12,478

Proceeds from asset sales and other
 
97

 
(42
)
 
647

 
5,222

Free Cash Flow
 
$
36,748

 
$
37,680

 
$
(23,576
)
 
$
31,631




Table 5
 
 
 
 
 
 
 
 
Summary Business Segment Information
 
 
 
 
 
 
 
 
(dollars in thousands)
 
 
 
 
 
 
 
 
 
 
Three months ended December 31,
 
Year ended December 31,
 
 
2012
 
2011
 
2012
 
2011
Net Sales:
 
 
 
 
 
 
 
 
Glass Operations(1)
 
$
201,327

 
$
199,228

 
$
753,006

 
$
746,581

Other Operations(2)
 
17,842

 
15,735

 
72,965

 
71,183

Eliminations
 
(108
)
 
(181
)
 
(684
)
 
(708
)
Consolidated
 
$
219,061

 
$
214,782

 
$
825,287

 
$
817,056

 
 
 
 
 
 
 
 
 
Segment Earnings before Interest & Taxes (Segment EBIT)(3)
 
 
 
 
 
 
Glass Operations(1)
 
$
24,211

 
$
19,551

 
$
118,470

 
$
96,716

Other Operations(2)
 
2,950

 
2,355

 
14,047

 
11,974

Segment EBIT
 
$
27,161

 
$
21,906

 
$
132,517

 
$
108,690

 
 
 
 
 
 
 
 
 
Reconciliation of Segment EBIT to Net Income:
 
 
 
 
 
 
 
 
Segment EBIT
 
$
27,161

 
$
21,906

 
$
132,517

 
$
108,690

Retained corporate costs (4)
 
(7,876
)
 
(10,535
)
 
(41,584
)
 
(37,789
)
Consolidated Adjusted EBIT
 
19,285

 
11,371

 
90,933

 
70,901

Loss on redemption of debt
 
—

 
—

 
(31,075
)
 
(2,803
)
Severance
 
(1,239
)
 
(1,105
)
 
(5,150
)
 
(1,105
)
Pension curtailment and settlement charge
 
(4,431
)
 
—

 
(4,306
)
 
—

Gain on sale of Traex assets
 
—

 
179

 
—

 
3,418

Gain on sale of land
 
—

 
—

 
—

 
3,445

Equipment write-down
 
—

 
(817
)
 
—

 
(817
)
Equipment credit
 
—

 
—

 
—

 
1,021

Restructuring charges
 
—

 
—

 
—

 
84

CEO transition expenses
 
—

 
(211
)
 
—

 
(2,722
)
Abandoned property
 
—

 
—

 
—

 
(2,719
)
Special Items before interest and taxes
 
(5,670
)
 
(1,954
)
 
(40,531
)
 
(2,198
)
Interest expense
 
(8,642
)
 
(10,490
)
 
(37,727
)
 
(43,419
)
Income taxes
 
(3,366
)
 
3,182

 
(5,709
)
 
(1,643
)
Net income
 
$
1,607

 
$
2,109

 
$
6,966

 
$
23,641

 
 
 
 
 
 
 
 
 
Depreciation & Amortization:
 
 
 
 
 
 
 
 
Glass Operations(1)
 
$
10,423

 
$
9,619

 
$
40,184

 
$
40,398

Other Operations(2)
 
8

 
8

 
40

 
265

Corporate
 
143

 
296

 
1,247

 
1,525

Consolidated
 
$
10,574

 
$
9,923

 
$
41,471

 
$
42,188


(1) Glass Operations—includes worldwide sales of manufactured and sourced glass tableware from domestic and international subsidiaries.
(2) Other Operations—includes worldwide sales of sourced ceramic dinnerware, metal tableware, hollowware and serveware. Plastic items were sold through April 28, 2011.
(3) Segment EBIT represents earnings before interest and taxes and excludes amounts related to certain items we consider not representative of ongoing operations, as well as, certain retained corporate costs.
(4) Retained corporate costs includes certain headquarter, administrative and facility costs, and other costs that are not allocable to the reporting segments.


Table 6
 
 
 
 
Reconciliation of Net Income to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA and Debt Net of Cash to Adjusted EBITDA Ratio
(dollars in thousands)
 
 
 
 
(unaudited)
 
 
 
 
 
 
Year ended December 31,
 
 
2012
 
2011
Reported net income
 
$
6,966

 
$
23,641

Add:
 
 
 
 
Interest expense
 
37,727

 
43,419

Provision for income taxes
 
5,709

 
1,643

Depreciation and amortization
 
41,471

 
42,188

EBITDA
 
91,873

 
110,891

Add: Special items before interest and taxes
 
40,531

 
2,198

Adjusted EBITDA
 
$
132,404

 
$
113,089

 
 
 
 
 
Debt
 
$
466,467

 
$
397,360

Plus: Unamortized discount and warrants
 
—

 
4,300

Less: Carrying value adjustment on debt related to the Interest Rate Agreement
408

 
4,043

Gross debt
 
466,059

 
397,617

Cash
 
67,208

 
58,291

Debt net of cash
 
$
398,851

 
$
339,326

 
 
 
 
 
Debt net of cash to Adjusted EBITDA ratio
 
3.0 x

 
3.0 x