EXHIBIT 99.1
Libbey Inc. logo LIBBEY INC.
300 MADISON AVE
P.O. BOX 10060
TOLEDO, OH 43699
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N E W S R E L E A S E
AT THE COMPANY: AT FINANCIAL RELATIONS BOARD:
- --------------- -----------------------------
KENNETH BOERGER SUZY LYNDE
VP/TREASURER ANALYST INQUIRIES
(419) 325-2279 (312) 640-6772
FOR IMMEDIATE RELEASE
THURSDAY, FEBRUARY 5, 2004
LIBBEY INC. ANNOUNCES FOURTH QUARTER DILUTED EPS
OF 52 CENTS, SALES UP 23 PERCENT
TOLEDO, OHIO, FEBRUARY 5, 2004--Citing higher sales offset by the continuing
impact of higher pension expense and higher natural gas costs, LIBBEY INC.
(NYSE: LBY) announced that its diluted earnings per share for the fourth quarter
ended December 31, 2003, were 52 cents on sales of $144.3 million.
FOURTH-QUARTER RESULTS
For the quarter-ended December 31, 2003, sales increased 23.0 percent to $144.3
million from $117.4 million in the year-ago quarter. The increase in sales was
primarily attributable to the sales of Royal Leerdam and Traex, both acquired in
December 2002. Excluding these acquisitions, sales increased 3.1 percent, as
sales to retail, industrial and export customers were higher than the year-ago
period. Glassware sales to foodservice customers were essentially even with the
prior year quarter. Sales to retail customers increased 20 percent as compared
to the year-ago fourth quarter, while sales to industrial customers were up more
than 20 percent.
The company recorded income from operations of $10.7 million during the quarter.
This compares with income from operations of $12.3 million in the year-ago
period. Factors contributing to the decline were higher natural gas costs of
approximately $1.1 million, additional costs (mostly non-cash) for pension and
postretirement medical benefits of almost $1.3 million, and higher distribution
costs of $0.7 million related to the increased sales. Partially offsetting these
higher costs were the contributions made by Traex and Royal Leerdam of $2.4
million to income from operations during the quarter.
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Libbey Inc.
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Earnings before interest and income taxes (EBIT) were $12.1 million compared
with $13.4 million in the year-ago quarter. Equity earnings from Vitrocrisa, the
company's joint venture in Mexico, were $1.4 million on a pretax basis, as
compared with $1.2 million pretax in the fourth quarter of 2002 as the result of
a favorable translation gain and lower interest expense.
For the quarter, Libbey recorded net income of $7.1 million, or 52 cents per
diluted share, compared with net income of $8.4 million, or 56 cents per diluted
share, in the year-ago period. Interest expense increased $1.5 million as a
result of an increase of debt to $230.9 million from $191.2 million at December
31, 2002. Debt increased after funding the repurchase of 1,500,000 shares for
$38.9 million in March 2003. The effective tax rate was 15.0 percent for the
quarter compared to 24.8 percent in the year-ago period as discussed below.
SALES INCREASED 18.4 PERCENT IN 2003
For the year-ended December 31, 2003, sales increased 18.4 percent to $513.6
million from $433.8 million in 2002. The increase in sales was attributable to
the Royal Leerdam and Traex acquisitions and strong second half sales to
Libbey's glassware customers. For the full year, despite a sluggish first half,
sales excluding these acquisitions were within 0.3% of the prior year.
Income from operations was $42.7 million compared with $53.7 million in the
year-ago period. In addition to the slightly lower pre-acquisition sales, other
factors that contributed to the decline included higher natural gas costs of
over $6.2 million and additional costs (mostly non-cash) for pension and
postretirement medical costs of $5.4 million.
Earnings before interest and income taxes (EBIT) were $47.6 million, an increase
of $2.7 million or 6.0 percent, compared with $44.9 million in the prior year
period. The prior period included $13.6 million of expenses related to an
abandoned acquisition. Equity earnings from Vitrocrisa were $4.4 million on a
pretax basis as compared with $6.4 million pretax in the year-ago period as the
result of higher natural gas costs and lower activity levels in the first half
of the year. Net income was $29.1 million, or $2.11 per diluted share, compared
with $28.1 million, or $1.82 per diluted share in the year-ago period. Interest
expense increased $5.2 million primarily as the result of higher debt, and the
effective tax rate declined to 15.0 percent from 23.5 percent as the result of a
tax restructuring. The year-to-date effective tax rate of 15.0 percent was
primarily attributable to a tax restructuring whereby the undistributed earnings
of the company's joint venture in Mexico will be permanently reinvested outside
of the United States, which eliminated the need for previously established net
deferred U.S. income taxes on those undistributed earnings. During 2002 the
company's effective tax rate was 23.5 percent, primarily attributable to a lower
Mexican tax, the elimination of non-deductible goodwill amortization, and an
adjustment to estimated U.S. income tax accruals. As detailed on the attached
Table 1, net income per diluted share excluding tax adjustments was $1.71 for
2003, as compared with $1.57 for 2002. The company expects the effective tax
rate for 2004 to be approximately 34 percent. Last year's net income included
expenses associated with an abandoned acquisition. These expenses totaled
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$13.6 million, less a tax effect of $5.1 million, or an after tax impact of
$8.5 million, or $0.55 per diluted share.
WORKING CAPITAL
Trade working capital, defined as inventories and accounts receivable less
accounts payable, increased as compared with year-end 2002. Total inventories
increased $16.1 million from year-end 2002 to $125.7 million, partially as a
result of the need to build inventories prior to planned furnace and machine
rebuilds occurring in the first quarter of 2004. Inventories decreased by $3.5
million during the fourth quarter of 2003.
OUTLOOK FOR 2004
John F. Meier, chairman and chief executive officer, commenting on the quarter
and the company's outlook for 2004 said, "We are pleased that we were able to
meet the fourth quarter expectations for sales and earnings announced by the
company last October. The contribution of $0.19 per diluted share to 2003
earnings by Royal Leerdam and Traex was at the high end of the $0.15 to $0.20
range announced as their expected contribution in January 2003. Exceeding $500
million in annual sales was also an important milestone for Libbey. Generally,
we expect sales growth to continue in 2004 as economic conditions continue to
improve." He added, " While we expect a strong first half of the year,
expectations for the first quarter include sales growth of 3 percent to 5
percent and diluted earnings per share of $0.00 to $0.03. The expected decrease
in earnings per diluted share, when compared to $0.14 per diluted share in the
first quarter of 2003, is primarily a result of an expected $2.2 million
unfavorable variance in equity earnings and $0.7 million higher pension expense.
However, income from operations in the first quarter of 2004 is expected to be
six to eight percent higher than the year-ago period. For the first six months
of 2004, diluted earnings per share are expected to be in the range of $0.75 to
$0.80, compared to $0.71 in the first six months of 2003. We expect this strong
second quarter to be driven by increased sales, higher capacity utilization, and
improved mix as compared to a very difficult second quarter of 2003."
Concerning the outlook for the full year 2004, the company announced
expectations of sales growth of four to six percent, income from operations
growth of ten to twelve percent and earnings per diluted share of $1.85 to
$1.95. As detailed on the attached Table 1, net income per diluted share
excluding tax adjustments was $1.71 for 2003.
WEBCAST INFORMATION
Libbey will hold a conference call for investors on Thursday, February 5,
2004, at 11 a.m. Eastern Daylight Time. The conference call will be
simulcast live on the Internet on both www.libbey.com and
www.firstcallevents.com/service/ajwz396535489gf12.html. 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 7 days after the
conclusion of the call.
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Libbey Inc.
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The above information 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.
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, including the impact of lower
duties for imported products; major slowdowns in the retail, travel or
entertainment industries in the United States, Canada, Mexico and Western
Europe, caused by terrorist attacks or otherwise; significant increases in per
unit costs for natural gas, electricity, corrugated packaging, and other
purchased materials; 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 the company's joint venture in Mexico,
Vitrocrisa, 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; whether the company completes any significant
acquisition, and whether such acquisitions can operate profitably.
Libbey Inc.:
o is a leading producer of glass tableware in North America;
o is a leading producer of tabletop products for the foodservice industry;
o exports to more than 75 countries; and,
o provides technical assistance to glass tableware manufacturers around
the world.
Based in Toledo, Ohio, the company operates glass tableware manufacturing plants
in the United States in California, Louisiana, and Ohio and in the Netherlands.
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. In addition, Libbey is a joint venture partner in the
largest glass tableware company in Mexico. 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 2003, Libbey
Inc.'s net sales totaled $513.6 million.
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LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per-share amounts)
THREE MONTHS ENDED
Percent
December 31, 2003 December 31, 2002 Change
----------------- ----------------- ------
Net sales $144,349 $117,399 23.0%
Freight billed to customers 525 536
Royalties and net technical assistance 800 300
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Total revenues 145,674 118,235 23.2%
Cost of sales 116,532 92,175 26.4%
Selling, general and administrative expenses 18,441 13,771 33.9%
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Income from operations 10,701 12,289 -12.9%
Equity earnings -- pretax 1,410 1,227
Expenses related to abandoned acquisition - 19
Other income (expense) (35) (145)
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Earnings before interest and income taxes 12,076 13,390 -9.8%
Interest expense--net 3,674 2,186
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Income before income taxes 8,402 11,204 -25.0%
Provision for income taxes 1,259 2,781
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Net income $ 7,143 $ 8,423 -15.2%
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Net income per share:
Basic $0.53 $0.57
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Diluted $0.52 $0.56
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Weighted average shares:
Outstanding 13,600 14,812
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Diluted 13,654 14,943
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TWELVE MONTHS ENDED
Percent
December 31, 2003 December 31, 2002 Change
----------------- ----------------- ------
Net sales $513,632 $433,761 18.4%
Freight billed to customers 1,965 1,732
Royalties and net technical assistance 3,022 2,404
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Total revenues 518,619 437,897 18.4%
Cost of sales 407,391 327,565 24.4%
Selling, general and administrative expenses 68,479 56,631 20.9%
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Income from operations 42,749 53,701 -20.4%
Equity earnings--pretax 4,429 6,379
Expenses related to abandoned acquisition - (13,634)
Other income (expense) 462 (1,510)
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Earnings before interest and income taxes 47,640 44,936 6.0%
Interest expense--net 13,436 8,263
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Income before income taxes 34,204 36,673 -6.7%
Provision for income taxes 5,131 8,618
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Net income $ 29,073 $ 28,055 3.6%
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Net income per share:
Basic $2.12 $1.84
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Diluted $2.11 $1.82
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Weighted average shares:
Outstanding 13,734 15,240
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Diluted 13,761 15,431
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LIBBEY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
December 31, 2003 December 31, 2002
----------------- -----------------
ASSETS
Cash $ 2,750 $ 1,683
Accounts receivable 57,122 49,944
Inventories 125,696 109,634
Other current assets 10,610 13,487
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Total current assets 196,178 174,748
Investments 87,574 87,847
Other assets 40,745 39,016
Goodwill 53,133 59,795
Net property, plant and equipment 173,486 163,121
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Total assets $551,116 $524,527
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LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable $ 611 $2,660
Accounts payable 40,280 31,633
Accrued liabilities 33,555 39,687
Other current liabilities 14,281 20,168
Long-term debt due within one year 115 115
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Total current liabilities 88,842 94,263
Long-term debt 230,207 188,403
Deferred taxes and other liabilities 27,873 25,795
Pension liability 17,092 28,655
Nonpension retirement benefits 47,245 47,193
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Total liabilities 411,259 384,309
Total shareholders' equity 139,857 140,218
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Total liabilities and shareholders' equity $551,116 $524,527
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LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Dollars in thousands)
TWELVE MONTHS ENDED
December 31, 2003 December 31, 2002
----------------- -----------------
Operating activities
Net income $ 29,073 $ 28,055
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation 25,457 17,262
Amortization 2,652 1,881
Loss (gain) on sale of land 148 (381)
Other non-cash charges (4,054) 3,456
Net equity earnings (4,420) (9,774)
Net change in components of working
capital and other assets (20,490) 13,706
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Net cash provided by operating activities 28,366 54,205
Investing activities
Additions to property, plant and equipment (24,874) (16,739)
Dividends received from equity investments 4,900 4,659
Acquisitions - (62,046)
Other 897 3,523
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Net cash used in investing activities (19,077) (70,603)
Financing activities
Net bank credit facility activity (66,254) 43,001
Senior notes 100,000 -
Payment of financing fees (663) (815)
Other net borrowings (2,275) 145
Stock options exercised 5,387 3,301
Treasury shares purchased (38,918) (26,837)
Dividends (5,506) (4,574)
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Net cash provided by (used in) financing activities (8,229) 14,221
Effect of exchange rate fluctuations on cash 7 -
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Increase (decrease) in cash 1,067 (2,177)
Cash at beginning of year 1,683 3,860
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Cash at end of period $ 2,750 $ 1,683
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LIBBEY INC.
CONDENSED CONSOLIDATED JOINT VENTURE INFORMATION
(Dollars in thousands)
Income Statement Information
Three months ended December 31, 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------
Net sales $ 47,140 $ 50,166
Other revenue 598 1,645
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Total revenue 47,738 51,811
Cost of sales 39,822 42,745
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Gross profit 7,916 9,066
Operating expenses 4,815 4,876
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Income from operations 3,101 4,190
Other income (expense) 126 (457)
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Earnings before finance costs and taxes 3,227 3,733
Interest expense 990 1,654
Translation gain 642 425
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Earnings before income taxes 2,879 2,504
Income taxes (1,324) (2,209)
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Net income $ 4,203 $ 4,713
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Twelve months ended December 31, 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------
Net sales $ 181,726 $ 193,152
Other revenue 1,924 3,307
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Total revenue 183,650 196,459
Cost of sales 150,939 158,801
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Gross profit 32,711 37,658
Operating expenses 21,005 21,108
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Income from operations 11,706 16,550
Other income (expense) (283) (435)
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Earnings before finance costs and taxes 11,423 16,115
Interest expense 5,036 6,127
Translation gain 2,652 3,030
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Earnings before income taxes 9,039 13,018
Income taxes 18 (6,928)
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Net income $ 9,021 $ 19,946
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The Company is a 49% equity owner in Vitrocrisa Holding, S. de R.L. de C.V. and
related Mexican companies (Vitrocrisa), which manufacture, market and sell glass
tableware (beverageware, plates, bowls, serveware and accessories) and
industrial glassware (coffee pots, blender jars, meter covers, glass covers for
cooking ware and lighting fixtures sold to original equipment manufacturers) and
a 49% equity owner in Crisa Industrial, L.L.C., a domestic distributor of
industrial glassware for Vitrocrisa in the U.S. and Canada. Summarized combined
financial information for the Company's investments, accounted for by the equity
method, is shown above.
In accordance with the SEC's Regulation G, the following table provides non-GAAP
measures used in the earnings release and the reconciliation to the most closely
related Generally Accepted Accounting Principles (GAAP) measure. Management
believes this provides investors with a more complete understanding of
underlying results in the company's core business.
TABLE 1
RECONCILIATION OF NON-GAAP MEASURES FOR INCOME TAXES
(Dollars in thousands, except per-share amounts)
Three months ended December 31,
2003 2002
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Reported net income $ 7,143 $ 8,423
Tax adjustment 1,342 1,008
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Net income excluding tax adjustment $ 5,801 $ 7,415
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Basic earnings per share:
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Reported net income $ 0.53 $ 0.57
Tax adjustment 0.10 0.07
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Net income per share excluding tax adjustment $ 0.43 $ 0.50
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Diluted earnings per share:
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Reported net income $ 0.52 $ 0.56
Tax adjustment 0.10 0.07
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Net income per diluted share excluding tax adjustment $ 0.42 $ 0.49
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Twelve months ended December 31,
2003 2002
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Reported net income $29,073 $28,055
Tax adjustment 5,472 3,851
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Net income excluding tax adjustment $23,601 $24,204
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Basic earnings per share:
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Reported net income $ 2.12 $ 1.84
Tax adjustment 0.40 0.25
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Net income per share excluding tax adjustment $ 1.72 $ 1.59
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Diluted earnings per share:
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Reported net income $ 2.11 $ 1.82
Tax adjustment 0.40 0.25
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Net income per diluted share excluding tax adjustment $ 1.71 $ 1.57
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In accordance with the SEC's Regulation G, the following table provides non-GAAP
measures used in the earnings release and the reconciliation to the most closely
related Generally Accepted Accounting Principles (GAAP) measure. Management
believes this provides investors with a more complete understanding of
underlying results in the company's core business.
RECONCILIATION OF NON-GAAP MEASURES FOR ABANDONED ACQUISITION
(Dollars in thousands, except per-share amounts)
Twelve months ended December 31,
2003 2002
------------ -------------
Reported net income $ 29,073 $ 28,055
Expenses associated with abandoned acquisition - 13,634
Less tax effect - 5,126
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Net income excluding expenses associated with abandoned acquisition $ 29,073 $ 36,563
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Basic earnings per share:
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Reported net income $ 2.12 $ 1.84
Expenses associated with abandoned acquisition, net of related tax effects - 0.55
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Net income per share excluding expenses associated with abandoned acquisition $ 2.12 $ 2.39
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Diluted earnings per share:
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Reported net income $ 2.11 $ 1.82
Expenses associated with abandoned acquisition, net of related tax effects - 0.55
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Net income per diluted share excluding expenses associated with abandoned acquisition $ 2.11 $ 2.37
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