Exhibit 99.1
| | | |
| | Libbey Inc.
300 Madison Ave
P.O. Box 10060
Toledo, OH 43699
|
NEWS RELEASE
| | | |
AT THE COMPANY: | | |
Kenneth Boerger | | Greg Geswein |
VP/Treasurer | | VP/Chief Financial Officer |
(419) 325-2279 | | (419) 325-2451 |
| | | |
FOR IMMEDIATE RELEASE | | |
THURSDAY, FEBRUARY 14, 2008 | | |
LIBBEY INC. ANNOUNCES FOURTH QUARTER RESULTS
ALL-TIME RECORD QUARTERLY SALES OF $225.1 MILLION
| • | | Sales Increase 5.5 Percent for Quarter and 18.1 Percent for Full Year |
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| • | | International Sales Increase 31.9 Percent for the Quarter and 28.0 Percent for Full Year |
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| • | | Sales for Full Year Increase 6.6 Percent Over 2006 Pro Forma Sales (Giving Effect to Crisa Acquisition) |
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| • | | Cash Flow From Operations $35.8 Million in Fourth Quarter |
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| • | | Income From Operations of $20.5 Million in Fourth Quarter and $66.1 Million for Full Year |
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| • | | Reported Net Loss of $5.0 million in Fourth Quarter and $2.3 Million for Full Year |
| |
| • | | EBITDA of $35.1 Million for Fourth Quarter, $7.1 Million Better Than Upper End of Guidance |
| |
| • | | Full Year 2007 EBITDA of $116.5 Million |
TOLEDO, OHIO, FEBRUARY 14, 2008—Libbey Inc. (NYSE: LBY)announced today that sales increased 5.5 percent to an all-time record $225.1 million in the fourth quarter of 2007 from $213.4 million in the prior year fourth quarter. Libbey reported a net loss of $5.0 million, or $0.34 per share, for the fourth quarter ended December 31, 2007, compared to a net loss of $8.5 million, or $0.60 per share, in the prior year quarter.
In the fourth quarter of 2007, Libbey recorded a non-cash tax charge of $15.3 million to establish a full valuation allowance against its net deferred tax assets in the United States. The valuation allowance does not reflect a change in the Company’s long-term financial outlook; it relates to the U.S. GAAP accounting requirements in situations where a company has a cumulative pre-tax loss in recent years. Excluding this non-cash charge of $15.3 million for the tax valuation allowance, net income would have been $10.3 million (see Table 4) and diluted earnings per share would have been $0.71 for the fourth quarter. The establishment of a valuation allowance has no impact on cash, and we expect to utilize our loss carry-forwards and other deferred tax assets when our U.S. operations generate future pre-tax profits.
Fourth Quarter Results
For the quarter-ended December 31, 2007, sales increased 5.5 percent to $225.1 million from $213.4 million in the year-ago quarter. Sales of the North American Glass segment were flat at $155.8 million versus $156.0 million in the fourth quarter of 2006 (see Table
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7). The sales results were attributable to approximately 5 percent growth of the sales of Crisa product, a 9.5 percent increase in shipments to U. S. and Canadian retail glassware customers and an approximately 5 percent reduction in sales to foodservice and industrial glassware customers. North American Other sales increased 8.6 percent, as shipments of Syracuse China products were up over 25 percent. Shipments to World Tableware and Traex customers were down less than 2 percent. International segment sales increased 31.9 percent as the result of increased shipments to customers of Royal Leerdam, Crisal and Libbey China and 10.8 percent favorable currency impact.
The Company reported income from operations of $20.5 million during the quarter, compared to income from operations of $9.5 million in the year-ago quarter. Income from operations, excluding special charges (see Table 2), was $12.8 million during the fourth quarter of 2006. Factors contributing to the increase in income from operations were higher sales, lower selling, general and administrative expenses and a litigation settlement of approximately $1.8 million.
Earnings before interest and taxes (EBIT) increased to $25.3 million from $8.5 million in the year-ago quarter as a result of the higher income from operations and other income of $4.7 million primarily related to a $4.3 million gain on the sale of land in the Netherlands. EBIT increased by $11.9 million to $15.7 million for North American Glass, primarily as a result of the improved income from operations. North American Other reported EBIT for the fourth quarter of 2007 of $4.4 million compared to $4.6 million in the year-ago quarter. The International segment reported improved EBIT of $5.2 million, compared to EBIT of $0.1 million in the fourth quarter of 2006, benefiting from the higher sales and margins at Royal Leerdam and a $4.3 million gain on the sale of land at Royal Leerdam.
Libbey reported that EBITDA increased to $35.1 million in the fourth quarter of 2007 compared to adjusted EBITDA, as detailed in Table 3, of $20.4 million in the year-ago quarter. Contributing to this increase was primarily the higher income from operations and gain on the sale of land as detailed above.
Interest expense decreased by $0.3 million to $16.9 million, compared to $17.2 million in the year-ago period, as the result of lower average revolving debt.
The effective tax rate increased to 159.6 percent for the quarter compared to 2.4 percent in the year-ago quarter. In the fourth quarter of 2007, Libbey recorded a non-cash tax charge of $15.3 million to establish a full valuation allowance against its net deferred tax assets in the United States. SFAS No. 109 requires that companies assess whether valuation allowances should be established against their deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. In making such judgments, significant weight is given to evidence that can be objectively verified. The Company’s current or previous losses are given more weight than its future outlook, and a recent historical cumulative loss is considered a significant factor that is difficult to overcome.
Libbey reported a net loss of $5.0 million, or $0.34 per share, for the fourth quarter ended December 31, 2007, compared to a net loss of $8.5 million, or $0.60 per share, in the
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prior year quarter. Excluding the non-cash charge of $15.3 million for the tax valuation allowance, net income would have been $10.3 million (see Table 4) and diluted earnings per share would have been $0.71 for the fourth quarter.
Twelve-Month Results
For the twelve months ended December 31, 2007, sales increased 18.1 percent, including a favorable currency impact of 1.4 percent, to $814.2 million from $689.5 million in 2006. North American Glass sales increased 19.3 percent to $568.5 million (see Table 7). The increase in sales was primarily attributable to the full year consolidation of the sales of Crisa and an increase of more than 11 percent in shipments to U.S. and Canadian retail glassware customers. North American Other sales increased 5.8 percent as shipments of World Tableware products increased 9.0 percent, shipments of Syracuse China products were up 5.0 percent and Traex sales increased less than 1 percent. International sales increased 28.0 percent to $136.7 million on the strength of increased shipments of both Royal Leerdam and Crisal products, the addition of shipments from Libbey China and favorable currency impact of 8.3 percent. On a pro forma basis, giving effect to the consolidation of Crisa as of January 1, 2006, as detailed in the attached Table 6, sales were up 6.6 percent.
Libbey reported income from operations of $66.1 million during 2007 compared to income from operations of $19.3 million for 2006. Income from operations margin of 8.1 percent for the full year 2007 was the highest percentage margin in five years. Adjusted income from operations, excluding special charges (see Table 2), was $37.8 million for the full year 2006. Primary contributors to the increase in income from operations were the consolidation of Crisa including the benefit of the capacity rationalization, higher overall sales and improved margins.
Earnings before interest and taxes (EBIT) increased to $74.9 million from $18.0 million in 2006. EBIT increased by $49.0 million to $54.5 million for North American Glass as a result of the full year consolidation of Crisa, higher sales and the benefits of the capacity rationalization at Crisa realized during 2007. The North American Other segment reported EBIT for 2007 of $15.7 million, compared to $9.4 million in 2006, as a result of higher sales, improved margins and the $1.1 million gain on the sale of land at Syracuse. The International segment also reported improved EBIT of $4.7 million compared to $3.2 million in 2006.
For the twelve months ended December 31, 2007, EBITDA was $116.5 million, a 61.7 percent increase over adjusted EBITDA, as detailed in Table 3 of $72.0 million during 2006. The additional EBITDA was primarily provided by the additional income from operations and other income explained above.
Interest expense increased $19.3 million compared to the year-ago period. Contributing to the increase in interest expense were higher debt and higher average interest rates resulting from the refinancing completed on June 16, 2006.
The effective tax rate increased to 125.7 percent for 2007 compared to 27.1 percent in 2006. In the fourth quarter of 2007, Libbey recorded a non-cash tax charge of $15.3
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million to establish a full valuation allowance against its net deferred tax assets in the United States. The valuation allowance does not reflect a change in the Company’s long-term financial outlook; it relates to the U. S. GAAP accounting requirements when a company has a cumulative pre-tax loss in recent years.
The Company recorded a net loss of $2.3 million, or $0.16 per diluted share for 2007, compared to a net loss of $20.9 million, or $1.47 per diluted share, in the year-ago period. The Company reported that its adjusted net income per diluted share for the full year 2007, as detailed in the attached Table 4, and excluding the tax valuation allowance of $15.3 million, was $0.90 per diluted share. This compares to adjusted diluted loss per share of $1.47 in 2006.
Cash Flow and Liquidity
Cash flow from operations in 2007 was $51.5 million as compared to $54.9 million in the year-ago period. Free cash flow, as detailed on Table 5, increased to $16.5 million from a use of cash of $97.2 million in 2006. Lower capital expenditures, the absence of an acquisition and related costs in 2007 and proceeds from asset sales all contributed to the improvement in 2007.
As of December 31, 2007, working capital, defined as inventories and accounts receivable less accounts payable, increased by $12.5 million from $188.4 million to $200.9 million compared to December 31, 2006, primarily as the result of the working capital investment at the new production facility in China and higher inventories in the United States and Portugal. Working capital as a percentage of net sales was 24.7 percent in 2007, which compares to working capital as a percentage of 2006 pro forma net sales (see Table 6) of 24.7 percent.
Libbey reported that it had available capacity of $89.7 million under its Asset Backed Loan (ABL) credit facility as of December 31, 2007. This compares to availability of $44.7 million at December 31, 2006.
Outlook for 2008
John F. Meier, chairman and chief executive officer, commenting on the quarter said, “We are extremely pleased with the strength of our fourth quarter and full year 2007 performance. We experienced increases in retail, foodservice, industrial and international glassware shipments during 2007. Sales to European glassware customers were robust. Crisa saw the benefits of the consolidation of their facilities.” He added, “We expect first quarter sales to be in the range of $185 million to $190 million, given the strength of our sales in the retail channel of distribution in North America and of our International operations during the fourth quarter of 2007. Earnings before interest, taxes, depreciation and amortization (EBITDA) are expected to be between $20 million and $22 million in the first quarter of 2008.”
Libbey also reported that it expects sales for 2008 to be in the range of $850 million to $870 million. Mr. Meier added, “With EBITDA expected to be in the range of $113
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million to $123 million for 2008, we are anticipating solid growth over 2007 EBITDA of $116.5 million which included $5.5 million in gains on the sale of excess land.”
Webcast Information
Libbey will hold a conference call for investors on Thursday, February 14, 2008, at 11 a.m. Eastern Standard Time. The conference call will be simulcast live on the Internet on bothwww.libbey.com andhttp://phx.corporate-ir.net/phoenix.zhtml?c=64169&p=irol-irhome. 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 30 days after the conclusion of the call.
This press release includes forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such statements only reflect 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, that actual results may differ materially from such 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 onForm 10-K filed with the Commission on March 16, 2007. 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; 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, corrugated packaging, and other purchased materials; higher indebtedness related to the Crisa acquisition; higher interest rates that increase the Company’s borrowing costs; 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 Crisa, 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. With respect to its expectations regarding the Crisa acquisition, these factors also include the ability of Vitro to supply necessary services to Crisa.
Libbey Inc.:
| • | | is the largest manufacturer of glass tableware in the western hemisphere and one of the largest glass tableware manufacturers in the world; |
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| • | | is expanding its international presence with facilities in China, Mexico, the Netherlands and Portugal; |
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| • | | is the leading manufacturer of tabletop products for the U.S. foodservice industry; and |
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| • | | supplies products to foodservice, retail, industrial and business-to-business customers in over 100 countries. |
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Based in Toledo, Ohio, the Company 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 the leading producer of glass tableware in Mexico and Latin America. Its Royal Leerdam 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, manufactures 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 holloware and an assortment of ceramic dinnerware and other tabletop items principally for foodservice establishments in the United States. Its Traex subsidiary, located in Wisconsin, designs, manufactures and distributes an extensive line of plastic items for the foodservice industry. In 2007, Libbey Inc.’s net sales totaled $814.2 million.
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LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per-share amounts)
| | | | | | | | | |
| | | THREE MONTHS ENDED | |
| | | December 31, 2007 | | | December 31, 2006 | |
| Net sales | | $ | 225,110 | | | $ | 213,361 | |
| Freight billed to customers | | | 676 | | | | 534 | |
| | | | | | | |
| Total revenues | | | 225,786 | | | | 213,895 | |
| | | | | | | | | |
Cost of sales(1) | | | 182,971 | | | | 172,617 | |
| | | | | | | |
| Gross profit | | | 42,815 | | | | 41,278 | |
| | | | | | | | | |
Selling, general and administrative expenses | | | 22,296 | | | | 28,055 | |
Special charges(1) | | | — | | | | 3,747 | |
| | | | | | | |
| Income from operations | | | 20,519 | | | | 9,476 | |
| Other income (expense) | | | 4,733 | | | | (992 | ) |
| | | | | | | |
| Earnings before interest, income taxes and minority interest | | | 25,252 | | | | 8,484 | |
| | | | | | | | | |
| Interest expense | | | 16,939 | | | | 17,234 | |
| | | | | | | |
| | | | | | | | | |
| Income (loss) before income taxes and minority interest | | | 8,313 | | | | (8,750 | ) |
| | | | | | | | | |
| Provision (benefit) for income taxes | | | 13,267 | | | | (212 | ) |
| | | | | | | |
| Net loss | | $ | (4,954 | ) | | $ | (8,538 | ) |
| | | | | | | |
| | | | | | | | | |
| Net loss per share: | | | | | | | | |
| Basic | | $ | (0.34 | ) | | $ | (0.60 | ) |
| | | | | | | |
| Diluted | | $ | (0.34 | ) | | $ | (0.60 | ) |
| | | | | | | |
| | | | | | | | | |
| Weighted average shares: | | | | | | | | |
| Outstanding | | | 14,553 | | | | 14,311 | |
| | | | | | | |
| Diluted | | | 14,553 | | | | 14,311 | |
| | | | | | | |
| | |
| (1) | | Refer to Table 1 for Special charges detail. |
LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per-share amounts)
| | | | | | | | | |
| | | TWELVE MONTHS ENDED | |
| | | December 31, 2007 | | | December 31, 2006(2) | |
| Net sales | | $ | 814,160 | | | $ | 689,480 | |
| Freight billed to customers | | | 2,207 | | | | 2,921 | |
| | | | | | | |
| Total revenues | | | 816,367 | | | | 692,401 | |
| | | | | | | | | |
Cost of sales(1) | | | 658,698 | | | | 569,237 | |
| | | | | | | |
| Gross profit | | | 157,669 | | | | 123,164 | |
| | | | | | | | | |
| Selling, general and administrative expenses | | | 91,568 | | | | 87,566 | |
Special charges(1) | | | — | | | | 16,334 | |
| | | | | | | |
| Income from operations | | | 66,101 | | | | 19,264 | |
| Equity income — pretax | | | — | | | | 1,986 | |
| Other income (expense) | | | 8,778 | | | | (3,236 | ) |
| | | | | | | |
| | | | | | | | | |
| Earnings before interest, income taxes and minority interest | | | 74,879 | | | | 18,014 | |
| | | | | | | | | |
Interest expense(1) | | | 65,888 | | | | 46,594 | |
| | | | | | | |
| | | | | | | | | |
| Income (loss) before income taxes and minority interest | | | 8,991 | | | | (28,580 | ) |
| | | | | | | | | |
| Provision (benefit) for income taxes | | | 11,298 | | | | (7,747 | ) |
| | | | | | | |
| | | | | | | | | |
| Loss before minority interest | | | (2,307 | ) | | | (20,833 | ) |
| | | | | | | | | |
| Minority interest | | | — | | | | (66 | ) |
| | | | | | | | | |
| | | | | | | |
| Net loss | | $ | (2,307 | ) | | $ | (20,899 | ) |
| | | | | | | |
| | | | | | | | | |
| Net loss per share: | | | | | | | | |
| Basic | | $ | (0.16 | ) | | $ | (1.47 | ) |
| | | | | | | |
| Diluted | | $ | (0.16 | ) | | $ | (1.47 | ) |
| | | | | | | |
| | | | | | | | | |
| Weighted average shares: | | | | | | | | |
| Outstanding | | | 14,472 | | | | 14,182 | |
| | | | | | | |
| Diluted | | | 14,472 | | | | 14,182 | |
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| | |
(1)
(2) | | Refer to Table 1 for Special charges detail.
Crisa results for January 1, 2006 through June 15, 2006 are reflected in equity earnings. Crisa results for June 16, 2006 through December 31, 2006 are included in the consolidated statement of operations above. |
LIBBEY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
| | | | | | | | | | | | | |
| | | December 31, 2007 | | | September 30, 2007 | | | December 31, 2006 | |
| | | | | | | (unaudited) | | | | | |
ASSETS | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Cash | | $ | 36,539 | | | $ | 13,406 | | | $ | 41,766 | |
| Accounts receivable — net | | | 93,333 | | | | 108,993 | | | | 96,783 | |
| Inventories — net | | | 182,942 | | | | 185,776 | | | | 159,123 | |
| Other current assets | | | 20,072 | | | | 15,449 | | | | 23,172 | |
| | | | | | | | | | |
| Total current assets | | | 332,886 | | | | 323,624 | | | | 320,844 | |
| | | | | | | | | | | | | |
| Other assets | | | 33,246 | | | | 45,190 | | | | 38,674 | |
| | | | | | | | | | | | | |
| Goodwill and purchased intangibles — net | | | 208,091 | | | | 207,829 | | | | 206,372 | |
| | | | | | | | | | | | | |
| Property, plant and equipment — net | | | 324,889 | | | | 320,440 | | | | 312,241 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Total assets | | $ | 899,112 | | | $ | 897,083 | | | $ | 878,131 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Notes payable | | $ | 622 | | | $ | 1,637 | | | $ | 226 | |
| Accounts payable | | | 75,387 | | | | 71,824 | | | | 67,493 | |
| Accrued liabilities | | | 68,318 | | | | 81,839 | | | | 76,301 | |
| Payable to Vitro | | | 19,575 | | | | 19,471 | | | | — | |
| Pension liability (current portion) | | | 1,883 | | | | 1,389 | | | | 1,389 | |
| Nonpension postretirement benefits (current portion) | | | 3,528 | | | | 3,252 | | | | 3,252 | |
| Other current liabilities | | | 11,199 | | | | 7,508 | | | | 4,132 | |
| Long-term debt due within one year | | | 913 | | | | 794 | | | | 794 | |
| | | | | | | | | | |
| Total current liabilities | | | 181,425 | | | | 187,714 | | | | 153,587 | |
| | | | | | | | | | | | | |
| Long-term debt | | | 495,099 | | | | 489,311 | | | | 490,212 | |
| Pension liability | | | 71,709 | | | | 75,372 | | | | 77,174 | |
| Nonpension postretirement benefits | | | 45,667 | | | | 37,608 | | | | 38,495 | |
| Payable to Vitro | | | — | | | | — | | | | 19,673 | |
| Other liabilities | | | 12,097 | | | | 8,809 | | | | 11,140 | |
| | | | | | | | | | |
| Total liabilities | | | 805,997 | | | | 798,814 | | | | 790,281 | |
| | | | | | | | | | | | | |
| Common stock, treasury stock, capital in excess of par value and warrants | | | 196,281 | | | | 178,408 | | | | 174,141 | |
| Retained deficit | | | (60,689 | ) | | | (38,750 | ) | | | (40,282 | ) |
| Accumulated other comprehensive loss | | | (42,477 | ) | | | (41,389 | ) | | | (46,009 | ) |
| | | | | | | | | | |
| Total shareholders’ equity | | | 93,115 | | | | 98,269 | | | | 87,850 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Total liabilities and shareholders’ equity | | $ | 899,112 | | | $ | 897,083 | | | $ | 878,131 | |
| | | | | | | | | | |
LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Dollars in thousands)
| | | | | | | | | |
| | | THREE MONTHS ENDED | |
| | | December 31, 2007 | | | December 31, 2006 | |
Operating activities | | | | | | | | |
| Net loss | | $ | (4,954 | ) | | $ | (8,538 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | | | | | | | | |
| Depreciation and amortization | | | 9,861 | | | | 8,508 | |
| Gain on sale of assets | | | (3,655 | ) | | | — | |
| Change in accounts receivable | | | 10,427 | | | | 10,991 | |
| Change in inventories | | | 3,037 | | | | 9,809 | |
| Change in accounts payable | | | 2,517 | | | | (2,486 | ) |
| Special charges | | | (153 | ) | | | 1,164 | |
| Pension & nonpension postretirement | | | (256 | ) | | | 457 | |
| Provision for deferred tax valuation allowance | | | 15,283 | | | | — | |
| Income taxes | | | (3,945 | ) | | | (14,016 | ) |
| Other operating activities | | | 7,618 | | | | 17,445 | |
| | | | | | | |
| Net cash provided by operating activities | | | 35,780 | | | | 23,334 | |
| | | | | | | | | |
Investing activities | | | | | | | | |
| Additions to property, plant and equipment | | | (11,129 | ) | | | (19,041 | ) |
| Business acquistion and related costs — net of cash | | | — | | | | (439 | ) |
| Proceeds from sale of assets and other | | | 5,582 | | | | — | |
| | | | | | | |
| Net cash used in investing activities | | | (5,547 | ) | | | (19,480 | ) |
| | | | | | | | | |
Financing activities | | | | | | | | |
| Net (repayments) borrowings | | | (6,973 | ) | | | 1,847 | |
| Debt Financing fees and other | | | 27 | | | | (1,603 | ) |
| Dividends | | | (363 | ) | | | (358 | ) |
| | | | | | | |
| Net cash used in financing activities | | | (7,309 | ) | | | (114 | ) |
| | | | | | | | | |
| Effect of exchange rate fluctuations on cash | | | 209 | | | | 222 | |
| | | | | | | |
| | | | | | | | | |
| Increase in cash | | | 23,133 | | | | 3,962 | |
| | | | | | | | | |
| Cash at beginning of period | | | 13,406 | | | | 37,804 | |
| | | | | | | |
| | | | | | | | | |
| Cash at end of period | | $ | 36,539 | | | $ | 41,766 | |
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LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Dollars in thousands)
| | | | | | | | | |
| | | TWELVE MONTHS ENDED | |
| | | December 31, 2007 | | | December 31, 2006 | |
Operating activities | | | | | | | | |
| Net loss | | $ | (2,307 | ) | | $ | (20,899 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | | | | | | | | |
| Depreciation and amortization | | | 41,572 | | | | 35,720 | |
| Gain on sale of assets | | | (4,923 | ) | | | — | |
| Equity loss — net of tax | | | — | | | | (1,493 | ) |
| Change in accounts receivable | | | 3,951 | | | | 9,745 | |
| Change in inventories | | | (21,091 | ) | | | 7,131 | |
| Change in accounts payable | | | 5,152 | | | | (425 | ) |
| Special charges | | | (920 | ) | | | 20,023 | |
| Pension & nonpension postretirement | | | (3,061 | ) | | | 9,885 | |
| Provision for deferred tax valuation allowance | | | 15,283 | | | | — | |
| Income taxes | | | (5,012 | ) | | | (30,995 | ) |
| Other operating activities | | | 22,813 | | | | 26,166 | |
| | | | | | | |
| Net cash provided by operating activities | | | 51,457 | | | | 54,858 | |
| | | | | | | | | |
Investing activities | | | | | | | | |
| Additions to property, plant and equipment | | | (43,121 | ) | | | (73,598 | ) |
| Business acquistion and related costs — net of cash | | | — | | | | (78,434 | ) |
| Proceeds from sale of assets and other | | | 8,213 | | | | — | |
| | | | | | | |
| Net cash used in investing activities | | | (34,908 | ) | | | (152,032 | ) |
| | | | | | | | | |
Financing activities | | | | | | | | |
| Net (repayments) borrowings | | | (20,850 | ) | | | 152,513 | |
| Debt Financing fees and other | | | (111 | ) | | | (15,798 | ) |
| Dividends | | | (1,446 | ) | | | (1,417 | ) |
| | | | | | | |
| Net cash (used in) provided by financing activities | | | (22,407 | ) | | | 135,298 | |
| | | | | | | | | |
| Effect of exchange rate fluctuations on cash | | | 631 | | | | 400 | |
| | | | | | | |
| | | | | | | | | |
| (Decrease) increase in cash | | | (5,227 | ) | | | 38,524 | |
| | | | | | | | | |
| Cash at beginning of year | | | 41,766 | | | | 3,242 | |
| | | | | | | |
| | | | | | | | | |
| Cash at end of year | | $ | 36,539 | | | $ | 41,766 | |
| | | | | | | |
Table 1
Summary of Special Charges
(Dollars in thousands)
| | | | | | | | | | | | | | | | | |
| | | Three Months ended December 31, | | | Twelve Months ended December 31, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
Capacity realignment: | | | | | | | | | | | | | | | | |
| Fixed asset related | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Gain on land sales | | | — | | | | (359 | ) | | | — | | | | (359 | ) |
| Employee termination costs & other | | | — | | | | 61 | | | | — | | | | 61 | |
| | | | | | | | | | | | | |
Included in Special charges | | $ | — | | | $ | (298 | ) | | $ | — | | | $ | (298 | ) |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| In August 2004, Libbey announced that it was realigning its production capacity in order to improve its cost structure. Pursuant to the plan, Libbey closed its manufacturing facility in City of Industry, California, in February 2005 and realigned production among its other glass manufacturing facilities. |
| | | | | | | | | | | | | | | | | |
Salary reduction program: | | | | | | | | | | | | | | | | |
| Employee termination costs & other | | $ | — | | | $ | (70 | ) | | $ | — | | | $ | (70 | ) |
| | | | | | | | | | | | | |
Included in Special charges | | $ | — | | | $ | (70 | ) | | $ | — | | | $ | (70 | ) |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| In June 2005, Libbey reduced its North American salaried workforce by ten percent in order to improve its overall cost profile. |
| | | | | | | | | | | | | | | | | |
Crisa restructuring: | | | | | | | | | | | | | | | | |
| Inventory write-down | | $ | — | | | $ | (385 | ) | | $ | — | | | $ | 2,158 | |
| | | | | | | | | | | | | |
Included in Cost of sales | | | — | | | | (385 | ) | | | — | | | | 2,158 | |
| | | | | | | | | | | | | | | | | |
| Fixed asset related | | | — | | | | 4,115 | | | | — | | | | 16,702 | |
| | | | | | | | | | | | | |
Included in Special charges | | | — | | | | 4,115 | | | | — | | | | 16,702 | |
| | | | | | | | | | | | | |
Crisa restructuring | | $ | — | | | $ | 3,730 | | | $ | — | | | $ | 18,860 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| In June 2006, Libbey announced plans to consolidate Crisa’s two principal manufacturing facilities. |
| | | | | | | | | | | | | | | | | |
Write-off of finance fees: | | | | | | | | | | | | | | | | |
| Write-off of finance fees | | $ | — | | | $ | — | | | $ | — | | | $ | 4,906 | |
| | | | | | | | | | | | | |
Included in Interest expense | | $ | — | | | $ | — | | | $ | — | | | $ | 4,906 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| In June 2006, Libbey wrote off unamortized finance fees related to debt refinancing at Libbey and Crisa. |
| | | | | | | | | | | | | | | | | |
Total special charges | | $ | — | | | $ | 3,362 | | | $ | — | | | $ | 23,398 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Special charges classifications as shown in the Condensed Consolidated Statement of Operations : |
| | | | | | | | | | | | | | | | | |
| Cost of sales | | $ | — | | | $ | (385 | ) | | $ | — | | | $ | 2,158 | |
| Special charges | | | — | | | | 3,747 | | | | — | | | | 16,334 | |
| Interest expense | | | — | | | | — | | | | — | | | | 4,906 | |
| | | | | | | | | | | | | |
Total special charges | | $ | — | | | $ | 3,362 | | | $ | — | | | $ | 23,398 | |
| | | | | | | | | | | | | |
In accordance with the SEC’s Regulation G, the following tables 2, 3 , 4, 5 and 6 provide non-GAAP measures used in the earnings release and a reconciliation to the most closely related Generally Accepted Accounting Principles (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 internally 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 2
Reconciliation of Non-GAAP Financial Measures for Special Charges
(Dollars in thousands)
| | | | | | | | | | | | | | | | | |
| | | Three months ended December 31, | | | Twelve months ended December 31, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| Income from operations | | $ | 20,519 | | | $ | 9,476 | | | $ | 66,101 | | | $ | 19,264 | |
| |
| Special charges (excluding write-off of finance fees) — pre-tax | | | — | | | | 3,362 | | | | — | | | | 18,492 | |
| | | | | | | | | | | | | |
| |
Adjusted income from operations | | $ | 20,519 | | | $ | 12,838 | | | $ | 66,101 | | | $ | 37,756 | |
| | | | | | | | | | | | | |
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, | | | Twelve Months ended December 31, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| Reported net loss | | $ | (4,954 | ) | | $ | (8,538 | ) | | $ | (2,307 | ) | | $ | (20,899 | ) |
| | | | | | | | | | | | | | | | | |
| Add: | | | | | | | | | | | | | | | | |
| Interest expense | | | 16,939 | | | | 17,234 | | | | 65,888 | | | | 46,594 | |
| Provision (benefit) for income taxes | | | 13,267 | | | | (212 | ) | | | 11,298 | | | | (7,747 | ) |
| Depreciation and amortization (2006 adjusted for minority interest) | | | 9,861 | | | | 8,508 | | | | 41,572 | | | | 35,556 | |
| | | | | | | | | | | | | |
EBITDA | | $ | 35,113 | | | $ | 16,992 | | | $ | 116,451 | | | $ | 53,504 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Add: | | | | | | | | | | | | | | | | |
| Special charges | | | — | | | | 3,362 | | | | — | | | | 18,492 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 35,113 | | | $ | 20,354 | | | $ | 116,451 | | | $ | 71,996 | |
| | | | | | | | | | | | | |
Table 4
Reconciliation of Non-GAAP Financial Measures for Tax Valuation Allowance
(Dollars in thousands)
| | | | | | | | | | | | | | | | | |
| | | Three months ended December 31, | | | Twelve months ended December 31, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
Adjusted net income (loss): | | | | | | | | | | | | | | | | |
| Reported net loss | | $ | (4,954 | ) | | $ | (8,538 | ) | | $ | (2,307 | ) | | $ | (20,899 | ) |
| Tax valuation allowance | | | 15,283 | | | | — | | | | 15,283 | | | | — | |
| | | | | | | | | | | | | |
Adjusted net income (loss) | | $ | 10,329 | | | $ | (8,538 | ) | | $ | 12,976 | | | $ | (20,899 | ) |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Adjusted net income (loss) per diluted share: | | | | | | | | | | | | | | | | |
| Reported net loss | | $ | (0.34 | ) | | $ | (0.60 | ) | | $ | (0.16 | ) | | $ | (1.47 | ) |
| Tax valuation allowance | | | 1.05 | | | | — | | | | 1.06 | | | | — | |
| | | | | | | | | | | | | |
Adjusted net income (loss) per diluted share | | $ | 0.71 | | | $ | (0.60 | ) | | $ | 0.90 | | | $ | (1.47 | ) |
| | | | | | | | | | | | | |
Table 5
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
(Dollars in thousands)
| | | | | | | | | | | | | | | | | |
| Net cash provided by operating activities | | $ | 35,780 | | | $ | 23,334 | | | $ | 51,457 | | | $ | 54,858 | |
| Capital expenditures | | | (11,129 | ) | | | (19,041 | ) | | | (43,121 | ) | | | (73,598 | ) |
| Acquisitions and related costs | | | — | | | | (439 | ) | | | — | | | | (78,434 | ) |
| Proceeds from asset sales and other | | | 5,582 | | | | — | | | | 8,213 | | | | — | |
| | | | | | | | | | | | | |
Free cash flow | | $ | 30,233 | | | $ | 3,854 | | | $ | 16,549 | | | $ | (97,174 | ) |
| | | | | | | | | | | | | |
Table 6
Summary Consolidated Pro-forma Results
(Dollars in thousands)
The following table presents the impact of the Crisa acquisition (closed on June 16, 2006) as if it occurred on January 1 of 2006.
| | | | | |
| | | Twelve months | |
| | | ended | |
| | | December 31, 2006 | |
Libbey | | | | |
Net sales | | $ | 600,295 | |
| | | | | |
| Earnings (loss) before interest and tax (EBIT) | | | 30,609 | |
| | | | | |
| Add: special charges | | | (368 | ) |
| | | | | |
| Less: minority interest (5% for Crisal) | | | (66 | ) |
| | | | |
| | | | | |
| Adjusted EBIT | | | 30,175 | |
| | | | | |
Pro forma adjustments: | | | | |
| Equity earnings | | | (1,986 | ) |
| | | | |
| | | | | |
Libbey adjusted pro forma EBIT | | | 28,189 | |
| | | | | |
| Depreciation & amortization (adjusted for minority interest) | | | 30,836 | |
| | | | |
| | | | | |
Libbey adjusted pro forma earnings before interest tax depreciation and amortization (EBITDA) | | $ | 59,025 | |
| | | | |
| | | | | |
Crisa | | | | |
Net sales | | $ | 195,812 | |
| | | | | |
| Earnings (loss) before interest and tax (EBIT) | | | (4,684 | ) |
| | | | | |
| Add: special charges | | | 18,860 | |
| | | | |
| | | | | |
| Adjusted EBIT | | | 14,176 | |
| | | | | |
Pro forma adjustments: | | | | |
| Pension expense | | | 2,638 | |
| Profit sharing expense | | | 1,560 | |
| Vitro corporate tax | | | 1,286 | |
| Rent expense | | | 470 | |
| Other | | | (36 | ) |
| | | | | |
| | | | |
| Total Crisa pro forma adjustments | | | 5,918 | |
| | | | | |
| | | | |
Crisa adjusted pro forma EBIT | | | 20,094 | |
| | | | | |
| Depreciation & amortization | | | 10,970 | |
| | | | |
| | | | | |
Crisa adjusted pro forma earnings before interest tax depreciation and amortization (EBITDA) | | $ | 31,064 | |
| | | | |
| | | | | |
| Net sales adjustments and eliminations | | | (32,554 | ) |
| | | | | |
Libbey consolidated | | | | |
Pro forma net sales | | $ | 763,553 | |
| | | | |
| | | | | |
Pro forma adjusted EBIT | | $ | 48,283 | |
| | | | |
| | | | | |
Pro forma adjusted EBITDA | | $ | 90,089 | |
| | | | |
Table 7
Summary Business Segment information
(Dollars in thousands)
| | | | | | | | | | | | | | | | | |
| | | Three months ended Dec. 31, | | | Twelve months ended Dec. 31, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
Net sales: | | | | | | | | | | | | | | | | |
| North American Glass | | $ | 155,823 | | | $ | 156,027 | | | $ | 568,495 | | | $ | 476,696 | |
| North American Other | | | 33,882 | | | | 31,200 | | | | 121,217 | | | | 114,581 | |
| International | | | 38,926 | | | | 29,509 | | | | 136,727 | | | | 106,798 | |
| Eliminations | | | (3,521 | ) | | | (3,375 | ) | | | (12,279 | ) | | | (8,595 | ) |
| | | | | | | | | | | | | |
| Consolidated net sales | | $ | 225,110 | | | $ | 213,361 | | | $ | 814,160 | | | $ | 689,480 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Earnings (loss) before interest & taxes (EBIT):(1) | | | | | | | | | | | | | | | | |
| North American Glass | | $ | 15,690 | | | $ | 3,821 | | | $ | 54,492 | | | $ | 5,471 | |
| North American Other | | | 4,377 | | | | 4,560 | | | | 15,670 | | | | 9,382 | |
| International | | | 5,185 | | | | 103 | | | | 4,717 | | | | 3,161 | |
| | | | | | | | | | | | | |
| Consolidated EBIT | | $ | 25,252 | | | $ | 8,484 | | | $ | 74,879 | | | $ | 18,014 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Depreciation & Amortization: | | | | | | | | | | | | | | | | |
| North American Glass | | $ | 5,717 | | | $ | 5,097 | | | $ | 25,558 | | | $ | 22,102 | |
| North American Other | | | 736 | | | | 916 | | | | 3,328 | | | | 3,450 | |
| International | | | 3,408 | | | | 2,495 | | | | 12,686 | | | | 10,168 | |
| | | | | | | | | | | | | |
| Consolidated depreciation & amortization | | $ | 9,861 | | | $ | 8,508 | | | $ | 41,572 | | | $ | 35,720 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Reconciliation of EBIT to Net loss: | | | | | | | | | | | | | | | | |
| Segment EBIT | | $ | 25,252 | | | $ | 8,484 | | | $ | 74,879 | | | $ | 18,014 | |
| Interest Expense | | | (16,939 | ) | | | (17,234 | ) | | | (65,888 | ) | | | (46,594 | ) |
| Income Taxes | | | (13,267 | ) | | | 212 | | | | (11,298 | ) | | | 7,747 | |
| Minority Interest | | | — | | | | — | | | | — | | | | (66 | ) |
| | | | | | | | | | | | | |
| Net loss | | $ | (4,954 | ) | | $ | (8,538 | ) | | $ | (2,307 | ) | | $ | (20,899 | ) |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
|
(1)EBIT includes the following special charges: | | | | | | | | | | | | | | | | |
| North American Glass | | $ | — | | | $ | 3,404 | | | $ | — | | | $ | 18,534 | |
| North American Other | | | — | | | | (42 | ) | | | — | | | | (42 | ) |
| International | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | |
| Consolidated special charges | | $ | — | | | $ | 3,362 | | | $ | — | | | $ | 18,492 | |
| | | | | | | | | | | | | |
Note:
North American Glass—includes sales of glass tableware from subsidiaries throughout the United States, Canada and Mexico.
North American Other—includes sales of ceramic dinnerware, metal tableware, holloware and serveware and plastic items.
International—includes worldwide sales of glass tableware from subsidiaries outside the United States, Canada and Mexico.
