Thursday, July 29, 2010 9:11:48 AM
Libbey Inc. Announces Strong Second Quarter 2010 Results
On Thursday July 29, 2010, 7:45 am EDT
TOLEDO, Ohio, July 29 /PRNewswire-FirstCall/ --
* Second Quarter Net Sales of $203.0 Million, an Increase of 3.7 Percent Compared to $195.8 Million in the Prior-Year Quarter
* Libbey Mexico Sales Increase 29.2 Percent
* Sales to U.S. and Canadian Retail Customers Increase 13.5 Percent
* International Sales Increase 6.8 Percent (13.4 percent excluding the impact of currency)
* Income From Operations of $23.2 Million in the Second Quarter of 2010 Compared to Income From Operations of $11.5 Million in the Prior-Year Quarter
* Net Income of $0.47 Per Diluted Share in the Second Quarter Compared to $0.18 Per Diluted Share in the Prior-Year Quarter
* Adjusted EBITDA of $37.3 Million in the Second Quarter of 2010 Compared to $25.2 Million in the Second Quarter of 2009; Best Quarterly Performance in Company History
* Best Second Quarter Free Cash Flow Performance in Company History
Libbey Inc. (NYSE Amex: LBY) announced today that sales for the second quarter of 2010 were $203.0 million, compared to $195.8 million in the second quarter of 2009, an improvement of 3.7 percent. Libbey reported net income of $9.6 million, or $0.47 per diluted share, for the second quarter ended June 30, 2010, compared to net income of $2.7 million, or $0.18 per diluted share, in the prior-year quarter. Excluding special items of $1.9 million in expense, Libbey had net income of $11.5 million (see Table 1) and diluted earnings per share of $0.56 for the second quarter of 2010. The special items in the second quarter of 2010 included a write-down of certain after-processing equipment within the Company's International segment.
Second Quarter Results
For the quarter-ended June 30, 2010, sales were $203.0 million, compared to $195.8 million in the year-ago quarter. Sales in the North American Glass segment were $146.4 million, an increase of 6.3 percent, compared to $137.7 million in the second quarter of 2009 (see Table 5). Primary contributors to the increased sales included a 29.2 percent increase in sales of Crisa products and a 13.5 percent increase in sales to U.S. and Canadian retail customers, compared to the prior-year quarter. Sales to U.S. and Canadian foodservice glassware customers decreased approximately 3.4 percent, as restaurant traffic continues to fluctuate from week to week. North American Other sales were $23.2 million, compared to $24.3 million in the prior-year quarter, as sales of Syracuse China products were off 22.1 percent, primarily due to the closure of the Syracuse China facility during the second quarter of 2009 and the decision to reduce the Syracuse China product offering. Sales of Traex products were lower by 3.1 percent versus the prior year. These decreases were partially offset by sales to World Tableware customers, which increased 5.2 percent during the quarter. International segment sales increased 6.8 percent (sales growth, excluding the impact of currency, was 13.4 percent during the quarter) to $36.9 million, compared to $34.5 million in the year-ago quarter. The increase in International sales was led by a 13.8 percent increase in sales to Royal Leerdam customers, an increase of 13.6 percent in sales at Libbey China and a 3.3 percent sales growth at Crisal in Portugal.
The Company reported income from operations of $23.2 million during the quarter, compared to income from operations of $11.5 million in the year-ago quarter. Income from operations, excluding special items (see Table 1), was $25.1 million in the second quarter of 2010, compared to $12.0 million during the second quarter of 2009. Factors contributing to the income from operations improvement (both including and excluding special items) were higher sales and higher capacity utilization, partially offset by higher selling, general and administrative expenses.
Libbey reported earnings before interest and taxes (EBIT) of $24.8 million, compared to income before interest and taxes of $14.2 million in the year-ago quarter. The improved EBIT was primarily a result of the increase in income from operations discussed above. EBIT, excluding special items (see Table 1), was $26.7 million in the second quarter of 2010, compared to $14.7 million during the second quarter of 2009. Adjusted EBIT (see Table 5) was $23.5 million for North American Glass, compared to adjusted EBIT of $11.9 million in the year-ago quarter. North American Other reported adjusted EBIT for the second quarter of 2010 of $4.7 million, compared to $3.7 million in the year-ago quarter. The International segment reported an adjusted EBIT loss of $1.5 million, compared to an adjusted EBIT loss of $0.9 million in the second quarter of 2009.
Libbey reported that Adjusted EBITDA (see Table 3) was an all-time record for any quarter in Company history at $37.3 million for the second quarter of 2010, compared to $25.2 million in the second quarter of 2009.
Interest expense decreased by $5.7 million to $11.8 million, compared to $17.5 million in the year-ago period, as a result of lower debt levels and the impact of the debt refinancing completed in February 2010.
The effective tax rate was 26.7 percent for the second quarter of 2010, compared to 181.1 percent in the second quarter of 2009. The effective tax rate was influenced by valuation allowances, changes in the mix of earnings with differing statutory rates and changes in accruals related to uncertain tax positions.
Libbey reported net income of $9.6 million, or $0.47 per diluted share, for the second quarter ended June 30, 2010, compared to net income of $2.7 million, or $0.18 per diluted share, in the prior year quarter. Excluding special items of $1.9 million, Libbey had net income of $11.5 million (see Table 1) and diluted earnings per share of $0.56 for the second quarter of 2010. The special items in the second quarter of 2010 included a write-down of certain after-processing equipment within the Company's International segment.
Six-Month Results
For the six months ended June 30, 2010, sales increased 6.6 percent to $376.9 million from $353.7 million in the year-ago period. North American Glass sales increased 8.3 percent to $267.0 million (see Table 5) from $246.5 million in the year-ago period. The increased sales were attributable to an approximate 30.5 percent increase in Crisa's sales and a solid 13.2 percent increase in sales to U.S. and Canadian retail customers. The Company reported an all-time record U.S. and Canadian retail sales performance during the first six months of 2010. Partially offsetting these increases in sales were lower sales to U.S. and Canadian foodservice customers, which decreased by 3.9 percent during the first six months of the year. North American Other sales decreased 6.6 percent as sales of Syracuse China decreased 28.0 percent and Traex sales were 4.3 percent lower than the first six months of 2009. Partially offsetting these decreases was an increase in World Tableware sales of 6.5 percent. International sales increased 15.4 percent as a result of 30.1 percent higher sales at Libbey China for the first half of 2010, compared to the first six months of 2009. In addition, sales of Royal Leerdam increased 18.4 percent and Crisal sales increased 9.3 percent. Excluding the currency impact, International sales increased approximately 16.3 percent.
The special items in the first six months of 2010 included a gain of $70.2 million, which represented the difference between the carrying value and the face value of the Payment in Kind (PIK) notes which were redeemed in February 2010. This gain was partially offset by the write-off of $13.4 million of unamortized fees and discounts on the refinanced floating rate senior notes and ABL credit facility and call premium payments.
The Company reported income from operations of $34.0 million during the first six months of 2010, compared to a loss from operations of $0.6 million in the year-ago period. Adjusted income from operations was $36.1 million for the first half of 2010 (see Table 2). Factors contributing to the increase in adjusted income from operations were higher sales, increased capacity utilization and the continued success of our cost reduction program. Increased selling, general and administrative expenses partially offset these increases.
EBIT was $91.7 million in the first six months of 2010, compared to $2.2 million in the first six months of 2009. Adjusted EBIT for the first six months of 2010, as detailed in Table 2, was $37.1 million compared to Adjusted EBIT of $7.5 million in the first six months of 2009. Adjusted EBIT for North American Glass was $31.5 million during the first half of 2010, compared to Adjusted EBIT of $5.8 million in the first six months of 2009. The increase is the result of increased sales and increased operating activity in U.S. and Mexican operations. North American Other reported Adjusted EBIT for the first half of 2010 of $8.3 million, compared to $5.0 million in the year-ago period, the increase being primarily a result of ongoing cost reductions. The International segment reported an Adjusted EBIT loss of $2.7 million, compared to an Adjusted EBIT loss of $3.3 million in the first six months of 2009. This improvement was primarily related to increased sales.
Libbey reported that Adjusted EBITDA, as detailed in Table 3, was $58.1 million in the first six months of 2010, compared to Adjusted EBITDA of $29.1 million in the year-ago six-month period.
As a result of lower debt levels and the impact of the debt refinancing completed in February 2010, interest expense decreased $13.3 million compared to the first half of 2009.
The effective tax rate was 7.5 percent for the first six months of 2010, compared to 22.5 percent in the first half of 2009. The effective tax rate was influenced by valuation allowances, changes in the mix of earnings with differing statutory rates and changes in accruals related to uncertain tax positions.
Libbey reported net income of $65.0 million for the first six months of 2010, or earnings of $3.21 per diluted share, compared to a net loss of $25.2 million, or $1.70 per diluted share, in the first half of 2009. Excluding special items of $54.5 million, Libbey had net income of $10.4 million (see Table 2) and diluted earnings per share of $0.52 for the first half of 2010, compared to a net loss of $19.8 million, or diluted loss per share of $1.34 in the first half of 2009. The special items in the first six months of 2010 included a gain of $70.2 million, which represented the difference between the carrying value and the face value of the Payment in Kind (PIK) notes which were redeemed in February 2010. This gain was partially offset by the write-off of $13.4 million of unamortized fees and discounts on the refinanced floating rate senior notes and ABL credit facility and call premium payments. Also included was a write-down of certain after-processing equipment within the Company's International segment.
Working Capital and Liquidity
As of June 30, 2010, working capital, defined as inventories and accounts receivable less accounts payable, was $190.2 million, compared to $182.6 million at June 30, 2009. Working capital as a percentage of net sales was 24.6 percent at June 30, 2010, compared to 24.3 percent at June 30, 2009.
Adjusted free cash flow, as detailed in the attached Table 4, was $30.9 million for the second quarter of 2010, compared to $20.1 million in the second quarter of 2009. Adjusted free cash flow was $10.0 million in the first half of 2010, after adjusting for the payment of interest on the PIK notes, compared to a source of $29.6 million in the first six months of 2009.
Libbey reported that it had available capacity of $55.9 million under its Asset Backed Loan (ABL) credit facility as of June 30, 2010, with no loans currently outstanding. The Company also had cash on hand of $46.2 million at June 30, 2010.
Solid Improvement in North American Glass and International Segments
John F. Meier, chairman and chief executive officer said, "We were pleased with the solid sales improvements we saw in both the North American Glass and International segments in the second quarter. The higher sales, increased capacity utilization and the ongoing benefits of the cost reductions we have put in place resulted in a record Adjusted EBITDA of $37.3 million, which was a $12.1 million improvement in Adjusted EBITDA, when compared to the prior year second quarter."
Webcast Information
Libbey will hold a conference call for investors on Thursday, July 29, 2010, at 11 a.m. Eastern Daylight Time. The conference call will be simulcast live on the Internet and is accessible from the Investor Relations section of www.libbey.com or at http://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 Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. 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 and that actual results may differ materially from these 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 10-K filed with the Commission on March 15, 2010. Important factors potentially affecting performance include but are not limited to increased competition from foreign suppliers from such statements, and that investors should not place undue reliance on such 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, corrugated packaging, and other purchased materials; higher indebtedness related to the Crisa acquisition; higher 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 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. 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.
Libbey Inc.:
* is the largest manufacturer of glass tableware in the western hemisphere and one of the largest glass tableware manufacturers in the world;
* is expanding its international presence with facilities in China, Mexico, the Netherlands and Portugal;
* is the leading manufacturer of tabletop products for the U.S. foodservice industry; and
* supplies products to foodservice, retail, industrial and business-to-business customers in over 100 countries.
Based in Toledo, Ohio, since 1888, 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 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 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 2009, Libbey Inc.'s net sales totaled $748.6 million.
LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per-share amounts)
(unaudited)
Three Months Ended June 30,
2010
2009
Net sales
$ 203,036
$ 195,826
Freight billed to customers
420
399
Total revenues
203,456
196,225
Cost of sales (1)
155,425
161,942
Gross profit
48,031
34,283
Selling, general and administrative expenses (1)
24,719
22,514
Special charges (1)
156
278
Income from operations
23,156
11,491
Other income (1)
1,656
2,758
Earnings before interest and income taxes
24,812
14,249
Interest expense
11,768
17,532
Income (loss) before income taxes
13,044
(3,283)
Provision for (benefit from) income taxes
3,477
(5,947)
Net income
$ 9,567
$ 2,664
Net income per share:
Basic
$ 0.59
$ 0.18
Diluted
$ 0.47
$ 0.18
Weighted average shares:
Outstanding
16,352
14,882
Diluted
20,441
15,151
(1) Refer to Table 1 for Special Charges detail.
LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per-share amounts)
(unaudited)
Six Months Ended June 30,
2010
2009
Net sales
$ 376,940
$ 353,679
Freight billed to customers
854
744
Total revenues
377,794
354,423
Cost of sales (1)
295,886
309,424
Gross profit
81,908
44,999
Selling, general and administrative expenses (1)
47,543
44,888
Special charges (1)
388
674
Income (loss) from operations
33,977
(563)
Gain on redemption of debt (1)
56,792
-
Other income (1)
893
2,721
Earnings before interest and income taxes
91,662
2,158
Interest expense
21,388
34,711
Income (loss) before income taxes
70,274
(32,553)
Provision for (benefit from) income taxes
5,297
(7,324)
Net income (loss)
$ 64,977
$ (25,229)
Net income (loss) per share:
Basic
$ 3.98
$ (1.70)
Diluted
$ 3.21
$ (1.70)
Weighted average shares:
Outstanding
16,308
14,812
Diluted
20,245
14,812
(1) Refer to Table 2 for Special Items detail.
LIBBEY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30, 2010
December 31, 2009
(unaudited)
ASSETS
Cash & cash equivalents
$ 46,173
$ 55,089
Accounts receivable - net
92,782
82,424
Inventories - net
153,187
144,015
Other current assets
12,538
11,783
Total current assets
304,680
293,311
Pension asset
9,822
9,454
Goodwill and purchased intangibles - net
191,746
193,181
Property, plant and equipment - net
267,053
290,013
Other assets
20,871
8,854
Total assets
$ 794,172
$ 794,813
LIABILITIES AND SHAREHOLDERS' DEFICIT
Notes payable
$ 770
$ 672
Accounts payable
55,775
58,838
Accrued liabilities
78,541
69,763
Pension liability (current portion)
2,000
1,984
Nonpension postretirement benefits (current portion)
4,363
4,363
Other current liabilities
8,979
7,921
Long-term debt due within one year
9,873
9,843
Total current liabilities
160,301
153,384
Long-term debt
441,805
504,724
Pension liability
120,182
119,727
Nonpension postretirement benefits
65,428
64,780
Other liabilities
18,152
19,105
Total liabilities
805,868
861,720
Common stock, treasury stock, capital in excess of par value and warrants
257,127
254,161
Accumulated deficit
(141,631)
(205,344)
Accumulated other comprehensive loss
(127,192)
(115,724)
Total shareholders' deficit
(11,696)
(66,907)
Total liabilities and shareholders' deficit
$ 794,172
$ 794,813
LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Dollars in thousands)
(unaudited)
Three Months Ended June 30,
2010
2009
Operating activities:
Net income
$ 9,567
$ 2,664
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
10,568
10,518
Loss on asset disposals
185
23
Change in accounts receivable
(7,096)
(16,007)
Change in inventories
(3,896)
26,962
Change in accounts payable
5,078
2,156
Accrued interest and amortization of discounts, warrants and finance fees
10,585
(13,129)
Accrual of interest on PIK notes
-
11,916
Pension & nonpension postretirement benefits
(134)
194
Restructuring charges
2,827
(2,301)
Accrued liabilities & prepaid expenses
6,955
10,104
Accrued income taxes
3,405
(6,674)
Other operating activities
68
(1,720)
Net cash provided by operating activities
38,112
24,706
Investing activities:
Additions to property, plant and equipment
(7,231)
(4,610)
Proceeds from asset sales and other
-
21
Net cash used in investing activities
(7,231)
(4,589)
Financing activities:
Net (repayments) borrowings on ABL credit facility
-
(10,803)
Other repayments
(632)
(2,006)
Debt issuance costs and other
(1,455)
-
Net cash used in financing activities
(2,087)
(12,809)
Effect of exchange rate fluctuations on cash
(648)
311
Increase in cash
28,146
7,619
Cash at beginning of period
18,027
16,463
Cash at end of period
$ 46,173
$ 24,082
LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Dollars in thousands)
(unaudited)
Six Months Ended June 30,
2010
2009
Operating activities:
Net income (loss)
$ 64,977
$ (25,229)
Adjustments to reconcile net income (loss) to net
cash (used in) provided by operating activities:
Depreciation and amortization
20,954
22,246
Loss on asset disposals
265
32
Change in accounts receivable
(13,612)
(15,597)
Change in inventories
(14,800)
38,246
Change in accounts payable
837
113
Accrued interest and amortization of discounts, warrants and finance fees
15,791
1,551
Accrual of interest on PIK notes
-
11,916
Gain on redemption of PIK Notes
(70,193)
-
Payment of interest on PIK Notes
(29,400)
-
Call premium on floating rate notes
8,415
-
Write-off of bank fees & discounts on old ABL and floating rate notes
4,986
-
Pension & nonpension postretirement benefits
2,871
3,165
Restructuring charges
2,396
(751)
Accrued liabilities & prepaid expenses
(2,513)
12,784
Accrued income taxes
(239)
(8,637)
Other operating activities
1,212
(749)
Net cash (used in) provided by operating activities
(8,053)
39,090
Investing activities:
Additions to property, plant and equipment
(11,379)
(9,550)
Call premium on floating rate notes
(8,415)
-
Proceeds from asset sales and other
-
88
Net cash used in investing activities
(19,794)
(9,462)
Financing activities:
Net (repayments) borrowings on ABL credit facility
-
(16,689)
Other repayments
(91)
(2,123)
Other borrowings
215
-
Floating rate note payments
(306,000)
-
PIK Note payment
(51,031)
-
Proceeds from senior secured notes
392,328
-
Debt issuance costs and other
(15,488)
-
Net cash provided by (used in) financing activities
19,933
(18,812)
Effect of exchange rate fluctuations on cash
(1,002)
(38)
(Decrease) increase in cash
(8,916)
10,778
Cash at beginning of period
55,089
13,304
Cash at end of period
$ 46,173
$ 24,082
In accordance with the SEC’s Regulation G, tables 1, 2, 3 and 4 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 June 30,
2010
2009
As Reported
Special Items
As Adjusted
As Reported
Special Items
As Adjusted
Net sales
$ 203,036
$ -
$ 203,036
$ 195,826
$ -
$ 195,826
Freight billed to customers
420
-
420
399
-
399
Total revenues
203,456
-
203,456
196,225
-
196,225
Cost of sales
155,425
1,742
153,683
161,942
(2)
161,944
Gross profit
48,031
(1,742)
49,773
34,283
2
34,281
Selling, general and administrative expenses
24,719
-
24,719
22,514
200
22,314
Special charges
156
156
-
278
278
-
Income from operations
23,156
(1,898)
25,054
11,491
(476)
11,967
Other income
1,656
-
1,656
2,758
43
2,715
Earnings before interest and income taxes
24,812
(1,898)
26,710
14,249
(433)
14,682
Interest expense
11,768
-
11,768
17,532
-
17,532
Income (loss) before income taxes
13,044
(1,898)
14,942
(3,283)
(433)
(2,850)
Provision for (benefit from) income taxes
3,477
-
3,477
(5,947)
-
(5,947)
Net income
$ 9,567
$ (1,898)
$ 11,465
$ 2,664
$ (433)
$ 3,097
Net income per share:
Basic
$ 0.59
$ (0.12)
$ 0.70
$ 0.18
$ (0.03)
$ 0.21
Diluted
$ 0.47
$ (0.09)
$ 0.56
$ 0.18
$ (0.03)
$ 0.20
Weighted average shares:
Outstanding
16,352
14,882
Diluted
20,441
15,151
Three Months Ended June 30, 2010
Three Months Ended June 30, 2009
Total
Pension
Total
Restructuring
Special
Settlement
Restructuring
Special
Special Items Detail-(income) expense:
Charges (1)
Other (2)
Items
Charge (3)
Charges (1)
Items
Cost of sales
$ -
$ 1,742
$ 1,742
$ -
$ (2)
$ (2)
SG&A
-
-
-
200
-
200
Special charges
156
-
156
-
278
278
Other expense
-
-
-
-
(43)
(43)
Total Special Items
$ 156
$ 1,742
$ 1,898
$ 200
$ 233
$ 433
(1) Restructuring charges are related to the closure of our Syracuse, New York, manufacturing facility and our Mira Loma, California, distribution center.
(2) Other includes a write down of certain after-processing equipment within our International segment and other items.
(3) The pension settlement charges were triggered by excess lump sum distributions taken by employees, which required us to record unrecognized gains and losses in our pension plan accounts.
Table 2
Reconciliation of "As Reported" results to "As Adjusted" results - Six Months
(Dollars in thousands, except per-share amounts)
(unaudited)
Six Months Ended June 30,
2010
2009
As Reported
Special Items
As Adjusted
As Reported
Special Items
As Adjusted
Net sales
$ 376,940
$ -
$ 376,940
$ 353,679
$ -
$ 353,679
Freight billed to customers
854
-
854
744
-
744
Total revenues
377,794
-
377,794
354,423
-
354,423
Cost of sales
295,886
1,742
294,144
309,424
1,821
307,603
Gross profit
81,908
(1,742)
83,650
44,999
(1,821)
46,820
Selling, general and administrative expenses
47,543
-
47,543
44,888
2,700
42,188
Special charges
388
388
-
674
674
-
Income (loss) from operations
33,977
(2,130)
36,107
(563)
(5,195)
4,632
Gain on redemption of debt
56,792
56,792
-
-
-
-
Other income
893
(130)
1,023
2,721
(186)
2,907
Earnings before interest and income taxes
91,662
54,532
37,130
2,158
(5,381)
7,539
Interest expense
21,388
-
21,388
34,711
-
34,711
Income (loss) before income taxes
70,274
54,532
15,742
(32,553)
(5,381)
(27,172)
Provision for (benefit from) income taxes
5,297
-
5,297
(7,324)
-
(7,324)
Net income (loss)
$ 64,977
$ 54,532
$ 10,445
$ (25,229)
$ (5,381)
$ (19,848)
Net income (loss) per share:
Basic
$ 3.98
$ 3.34
$ 0.64
$ (1.70)
$ (0.36)
$ (1.34)
Diluted
$ 3.21
$ 2.69
$ 0.52
$ (1.70)
$ (0.36)
$ (1.34)
Weighted average shares:
Outstanding
16,308
14,812
Diluted
20,245
14,812
Six Months Ended June 30, 2010
Six Months Ended June 30, 2009
Gain on
Total
Pension
Total
PIK
Restructuring
Finance
Special
Settlement
Restructuring
Special
Special Items Detail-(income) expense:
Notes (1)
Charges (2)
Fees (3)
Other (4)
Items
Charge (5)
Charges (2)
Items
Cost of sales
$ -
$ -
$ -
$ 1,742
$ 1,742
$ -
$ 1,821
$ 1,821
SG&A
-
-
-
-
-
2,700
-
2,700
Special charges
-
388
-
-
388
-
674
674
Gain on redemption of debt
(70,193)
-
13,401
-
(56,792)
-
-
-
Other expense
-
130
-
-
130
-
186
186
Total Special Items
$ (70,193)
$ 518
$ 13,401
$ 1,742
$ (54,532)
$ 2,700
$ 2,681
$ 5,381
(1) Gain on PIK Notes is the difference between the carrying value and the face value of the PIK Notes when we redeemed them in February 2010.
(2) Restructuring charges are related to the closure of our Syracuse, New York, manufacturing facility and our Mira Loma, California, distribution center.
(3) Finance fees include the write-off of unamortized finance fees and discounts on the floating rate senior notes, unamortized finance fees on the refinanced credit facility and call premium
payments.
(4) Other includes a write down of certain after-processing equipment within our International segment and other items.
(5) The pension settlement charges were triggered by excess lump sum distributions taken by employees, which required us to record unrecognized gains and losses in our pension plan
accounts.
Table 3
Reconciliation of Net Income (Loss) to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA
(Dollars in thousands)
Three Months Ended June 30,
Six Months ended June 30,
2010
2009
2010
2009
Reported net income (loss)
$ 9,567
$ 2,664
$ 64,977
$ (25,229)
Add:
Interest expense
11,768
17,532
21,388
34,711
Provision for (benefit from) income taxes
3,477
(5,947)
5,297
(7,324)
Depreciation and amortization
10,568
10,518
20,954
22,246
EBITDA
35,380
24,767
112,616
24,404
Add:
Special Items before interest and taxes
1,898
433
(54,532)
5,381
Less: Depreciation expense included in Special Items and also in Depreciation and Amortization above
-
-
-
(705)
Adjusted EBITDA
$ 37,278
$ 25,200
$ 58,084
$ 29,080
Table 4
Reconciliation of Net Cash provided by (used in) Operating Activities to Free Cash Flow and Adjusted Free Cash Flow
(Dollars in thousands)
Three Months Ended June 30,
Six Months ended June 30,
2010
2009
2010
2009
Net cash provided by (used in) operating activities
$ 38,112
$ 24,706
$ (8,053)
$ 39,090
Capital expenditures
(7,231)
(4,610)
(11,379)
(9,550)
Proceeds from asset sales and other
-
21
-
88
Free Cash Flow
30,881
20,117
(19,432)
29,628
Payment of cash interest on PIK Notes
-
-
29,400
-
Adjusted Free Cash Flow
$ 30,881
$ 20,117
$ 9,968
$ 29,628
Table 5
Summary Business Segment information
(Dollars in thousands)
Three months ended June 30,
Six months ended June 30,
2010
2009
2010
2009
Net Sales:
North American Glass
$ 146,415
$ 137,744
$ 266,982
$ 246,487
North American Other
23,158
24,341
42,720
45,718
International
36,870
34,533
73,136
63,384
Eliminations
(3,407)
(792)
(5,898)
(1,910)
Consolidated Net Sales
$ 203,036
$ 195,826
$ 376,940
$ 353,679
Adjusted Earnings before Interest & Taxes (EBIT):
North American Glass
$ 23,506
$ 11,930
$ 31,533
$ 5,807
North American Other
4,745
3,691
8,256
5,017
International
(1,541)
(939)
(2,659)
(3,285)
Consolidated Adjusted EBIT
$ 26,710
$ 14,682
$ 37,130
$ 7,539
Adjusted Depreciation & Amortization: (1)
North American Glass
$ 6,169
$ 6,336
$ 12,282
$ 12,783
North American Other
192
243
386
881
International
4,207
3,939
8,286
7,877
Consolidated Adjusted Depreciation & Amortization
$ 10,568
$ 10,518
$ 20,954
$ 21,541
(1) Adjusted Depreciation & Amortization for YTD 2009 excludes $705 of depreciation expense that is included in Special Items below.
Special Items:
North American Glass
$ (945)
$ 172
$ (57,708)
$ 2,674
North American Other
156
261
489
2,707
International
2,687
-
2,687
-
Consolidated Special Items
$ 1,898
$ 433
$ (54,532)
$ 5,381
Reconciliation of Adjusted EBIT to Net Income (Loss):
Segment Adjusted EBIT
$ 26,710
$ 14,682
$ 37,130
$ 7,539
Special Items before interest and taxes
(1,898)
(433)
54,532
(5,381)
Interest Expense
(11,768)
(17,532)
(21,388)
(34,711)
Income Taxes
(3,477)
5,947
(5,297)
7,324
Net Income (Loss)
$ 9,567
$ 2,664
$ 64,977
$ (25,229)
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.
On Thursday July 29, 2010, 7:45 am EDT
TOLEDO, Ohio, July 29 /PRNewswire-FirstCall/ --
* Second Quarter Net Sales of $203.0 Million, an Increase of 3.7 Percent Compared to $195.8 Million in the Prior-Year Quarter
* Libbey Mexico Sales Increase 29.2 Percent
* Sales to U.S. and Canadian Retail Customers Increase 13.5 Percent
* International Sales Increase 6.8 Percent (13.4 percent excluding the impact of currency)
* Income From Operations of $23.2 Million in the Second Quarter of 2010 Compared to Income From Operations of $11.5 Million in the Prior-Year Quarter
* Net Income of $0.47 Per Diluted Share in the Second Quarter Compared to $0.18 Per Diluted Share in the Prior-Year Quarter
* Adjusted EBITDA of $37.3 Million in the Second Quarter of 2010 Compared to $25.2 Million in the Second Quarter of 2009; Best Quarterly Performance in Company History
* Best Second Quarter Free Cash Flow Performance in Company History
Libbey Inc. (NYSE Amex: LBY) announced today that sales for the second quarter of 2010 were $203.0 million, compared to $195.8 million in the second quarter of 2009, an improvement of 3.7 percent. Libbey reported net income of $9.6 million, or $0.47 per diluted share, for the second quarter ended June 30, 2010, compared to net income of $2.7 million, or $0.18 per diluted share, in the prior-year quarter. Excluding special items of $1.9 million in expense, Libbey had net income of $11.5 million (see Table 1) and diluted earnings per share of $0.56 for the second quarter of 2010. The special items in the second quarter of 2010 included a write-down of certain after-processing equipment within the Company's International segment.
Second Quarter Results
For the quarter-ended June 30, 2010, sales were $203.0 million, compared to $195.8 million in the year-ago quarter. Sales in the North American Glass segment were $146.4 million, an increase of 6.3 percent, compared to $137.7 million in the second quarter of 2009 (see Table 5). Primary contributors to the increased sales included a 29.2 percent increase in sales of Crisa products and a 13.5 percent increase in sales to U.S. and Canadian retail customers, compared to the prior-year quarter. Sales to U.S. and Canadian foodservice glassware customers decreased approximately 3.4 percent, as restaurant traffic continues to fluctuate from week to week. North American Other sales were $23.2 million, compared to $24.3 million in the prior-year quarter, as sales of Syracuse China products were off 22.1 percent, primarily due to the closure of the Syracuse China facility during the second quarter of 2009 and the decision to reduce the Syracuse China product offering. Sales of Traex products were lower by 3.1 percent versus the prior year. These decreases were partially offset by sales to World Tableware customers, which increased 5.2 percent during the quarter. International segment sales increased 6.8 percent (sales growth, excluding the impact of currency, was 13.4 percent during the quarter) to $36.9 million, compared to $34.5 million in the year-ago quarter. The increase in International sales was led by a 13.8 percent increase in sales to Royal Leerdam customers, an increase of 13.6 percent in sales at Libbey China and a 3.3 percent sales growth at Crisal in Portugal.
The Company reported income from operations of $23.2 million during the quarter, compared to income from operations of $11.5 million in the year-ago quarter. Income from operations, excluding special items (see Table 1), was $25.1 million in the second quarter of 2010, compared to $12.0 million during the second quarter of 2009. Factors contributing to the income from operations improvement (both including and excluding special items) were higher sales and higher capacity utilization, partially offset by higher selling, general and administrative expenses.
Libbey reported earnings before interest and taxes (EBIT) of $24.8 million, compared to income before interest and taxes of $14.2 million in the year-ago quarter. The improved EBIT was primarily a result of the increase in income from operations discussed above. EBIT, excluding special items (see Table 1), was $26.7 million in the second quarter of 2010, compared to $14.7 million during the second quarter of 2009. Adjusted EBIT (see Table 5) was $23.5 million for North American Glass, compared to adjusted EBIT of $11.9 million in the year-ago quarter. North American Other reported adjusted EBIT for the second quarter of 2010 of $4.7 million, compared to $3.7 million in the year-ago quarter. The International segment reported an adjusted EBIT loss of $1.5 million, compared to an adjusted EBIT loss of $0.9 million in the second quarter of 2009.
Libbey reported that Adjusted EBITDA (see Table 3) was an all-time record for any quarter in Company history at $37.3 million for the second quarter of 2010, compared to $25.2 million in the second quarter of 2009.
Interest expense decreased by $5.7 million to $11.8 million, compared to $17.5 million in the year-ago period, as a result of lower debt levels and the impact of the debt refinancing completed in February 2010.
The effective tax rate was 26.7 percent for the second quarter of 2010, compared to 181.1 percent in the second quarter of 2009. The effective tax rate was influenced by valuation allowances, changes in the mix of earnings with differing statutory rates and changes in accruals related to uncertain tax positions.
Libbey reported net income of $9.6 million, or $0.47 per diluted share, for the second quarter ended June 30, 2010, compared to net income of $2.7 million, or $0.18 per diluted share, in the prior year quarter. Excluding special items of $1.9 million, Libbey had net income of $11.5 million (see Table 1) and diluted earnings per share of $0.56 for the second quarter of 2010. The special items in the second quarter of 2010 included a write-down of certain after-processing equipment within the Company's International segment.
Six-Month Results
For the six months ended June 30, 2010, sales increased 6.6 percent to $376.9 million from $353.7 million in the year-ago period. North American Glass sales increased 8.3 percent to $267.0 million (see Table 5) from $246.5 million in the year-ago period. The increased sales were attributable to an approximate 30.5 percent increase in Crisa's sales and a solid 13.2 percent increase in sales to U.S. and Canadian retail customers. The Company reported an all-time record U.S. and Canadian retail sales performance during the first six months of 2010. Partially offsetting these increases in sales were lower sales to U.S. and Canadian foodservice customers, which decreased by 3.9 percent during the first six months of the year. North American Other sales decreased 6.6 percent as sales of Syracuse China decreased 28.0 percent and Traex sales were 4.3 percent lower than the first six months of 2009. Partially offsetting these decreases was an increase in World Tableware sales of 6.5 percent. International sales increased 15.4 percent as a result of 30.1 percent higher sales at Libbey China for the first half of 2010, compared to the first six months of 2009. In addition, sales of Royal Leerdam increased 18.4 percent and Crisal sales increased 9.3 percent. Excluding the currency impact, International sales increased approximately 16.3 percent.
The special items in the first six months of 2010 included a gain of $70.2 million, which represented the difference between the carrying value and the face value of the Payment in Kind (PIK) notes which were redeemed in February 2010. This gain was partially offset by the write-off of $13.4 million of unamortized fees and discounts on the refinanced floating rate senior notes and ABL credit facility and call premium payments.
The Company reported income from operations of $34.0 million during the first six months of 2010, compared to a loss from operations of $0.6 million in the year-ago period. Adjusted income from operations was $36.1 million for the first half of 2010 (see Table 2). Factors contributing to the increase in adjusted income from operations were higher sales, increased capacity utilization and the continued success of our cost reduction program. Increased selling, general and administrative expenses partially offset these increases.
EBIT was $91.7 million in the first six months of 2010, compared to $2.2 million in the first six months of 2009. Adjusted EBIT for the first six months of 2010, as detailed in Table 2, was $37.1 million compared to Adjusted EBIT of $7.5 million in the first six months of 2009. Adjusted EBIT for North American Glass was $31.5 million during the first half of 2010, compared to Adjusted EBIT of $5.8 million in the first six months of 2009. The increase is the result of increased sales and increased operating activity in U.S. and Mexican operations. North American Other reported Adjusted EBIT for the first half of 2010 of $8.3 million, compared to $5.0 million in the year-ago period, the increase being primarily a result of ongoing cost reductions. The International segment reported an Adjusted EBIT loss of $2.7 million, compared to an Adjusted EBIT loss of $3.3 million in the first six months of 2009. This improvement was primarily related to increased sales.
Libbey reported that Adjusted EBITDA, as detailed in Table 3, was $58.1 million in the first six months of 2010, compared to Adjusted EBITDA of $29.1 million in the year-ago six-month period.
As a result of lower debt levels and the impact of the debt refinancing completed in February 2010, interest expense decreased $13.3 million compared to the first half of 2009.
The effective tax rate was 7.5 percent for the first six months of 2010, compared to 22.5 percent in the first half of 2009. The effective tax rate was influenced by valuation allowances, changes in the mix of earnings with differing statutory rates and changes in accruals related to uncertain tax positions.
Libbey reported net income of $65.0 million for the first six months of 2010, or earnings of $3.21 per diluted share, compared to a net loss of $25.2 million, or $1.70 per diluted share, in the first half of 2009. Excluding special items of $54.5 million, Libbey had net income of $10.4 million (see Table 2) and diluted earnings per share of $0.52 for the first half of 2010, compared to a net loss of $19.8 million, or diluted loss per share of $1.34 in the first half of 2009. The special items in the first six months of 2010 included a gain of $70.2 million, which represented the difference between the carrying value and the face value of the Payment in Kind (PIK) notes which were redeemed in February 2010. This gain was partially offset by the write-off of $13.4 million of unamortized fees and discounts on the refinanced floating rate senior notes and ABL credit facility and call premium payments. Also included was a write-down of certain after-processing equipment within the Company's International segment.
Working Capital and Liquidity
As of June 30, 2010, working capital, defined as inventories and accounts receivable less accounts payable, was $190.2 million, compared to $182.6 million at June 30, 2009. Working capital as a percentage of net sales was 24.6 percent at June 30, 2010, compared to 24.3 percent at June 30, 2009.
Adjusted free cash flow, as detailed in the attached Table 4, was $30.9 million for the second quarter of 2010, compared to $20.1 million in the second quarter of 2009. Adjusted free cash flow was $10.0 million in the first half of 2010, after adjusting for the payment of interest on the PIK notes, compared to a source of $29.6 million in the first six months of 2009.
Libbey reported that it had available capacity of $55.9 million under its Asset Backed Loan (ABL) credit facility as of June 30, 2010, with no loans currently outstanding. The Company also had cash on hand of $46.2 million at June 30, 2010.
Solid Improvement in North American Glass and International Segments
John F. Meier, chairman and chief executive officer said, "We were pleased with the solid sales improvements we saw in both the North American Glass and International segments in the second quarter. The higher sales, increased capacity utilization and the ongoing benefits of the cost reductions we have put in place resulted in a record Adjusted EBITDA of $37.3 million, which was a $12.1 million improvement in Adjusted EBITDA, when compared to the prior year second quarter."
Webcast Information
Libbey will hold a conference call for investors on Thursday, July 29, 2010, at 11 a.m. Eastern Daylight Time. The conference call will be simulcast live on the Internet and is accessible from the Investor Relations section of www.libbey.com or at http://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 Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. 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 and that actual results may differ materially from these 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 10-K filed with the Commission on March 15, 2010. Important factors potentially affecting performance include but are not limited to increased competition from foreign suppliers from such statements, and that investors should not place undue reliance on such 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, corrugated packaging, and other purchased materials; higher indebtedness related to the Crisa acquisition; higher 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 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. 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.
Libbey Inc.:
* is the largest manufacturer of glass tableware in the western hemisphere and one of the largest glass tableware manufacturers in the world;
* is expanding its international presence with facilities in China, Mexico, the Netherlands and Portugal;
* is the leading manufacturer of tabletop products for the U.S. foodservice industry; and
* supplies products to foodservice, retail, industrial and business-to-business customers in over 100 countries.
Based in Toledo, Ohio, since 1888, 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 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 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 2009, Libbey Inc.'s net sales totaled $748.6 million.
LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per-share amounts)
(unaudited)
Three Months Ended June 30,
2010
2009
Net sales
$ 203,036
$ 195,826
Freight billed to customers
420
399
Total revenues
203,456
196,225
Cost of sales (1)
155,425
161,942
Gross profit
48,031
34,283
Selling, general and administrative expenses (1)
24,719
22,514
Special charges (1)
156
278
Income from operations
23,156
11,491
Other income (1)
1,656
2,758
Earnings before interest and income taxes
24,812
14,249
Interest expense
11,768
17,532
Income (loss) before income taxes
13,044
(3,283)
Provision for (benefit from) income taxes
3,477
(5,947)
Net income
$ 9,567
$ 2,664
Net income per share:
Basic
$ 0.59
$ 0.18
Diluted
$ 0.47
$ 0.18
Weighted average shares:
Outstanding
16,352
14,882
Diluted
20,441
15,151
(1) Refer to Table 1 for Special Charges detail.
LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per-share amounts)
(unaudited)
Six Months Ended June 30,
2010
2009
Net sales
$ 376,940
$ 353,679
Freight billed to customers
854
744
Total revenues
377,794
354,423
Cost of sales (1)
295,886
309,424
Gross profit
81,908
44,999
Selling, general and administrative expenses (1)
47,543
44,888
Special charges (1)
388
674
Income (loss) from operations
33,977
(563)
Gain on redemption of debt (1)
56,792
-
Other income (1)
893
2,721
Earnings before interest and income taxes
91,662
2,158
Interest expense
21,388
34,711
Income (loss) before income taxes
70,274
(32,553)
Provision for (benefit from) income taxes
5,297
(7,324)
Net income (loss)
$ 64,977
$ (25,229)
Net income (loss) per share:
Basic
$ 3.98
$ (1.70)
Diluted
$ 3.21
$ (1.70)
Weighted average shares:
Outstanding
16,308
14,812
Diluted
20,245
14,812
(1) Refer to Table 2 for Special Items detail.
LIBBEY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30, 2010
December 31, 2009
(unaudited)
ASSETS
Cash & cash equivalents
$ 46,173
$ 55,089
Accounts receivable - net
92,782
82,424
Inventories - net
153,187
144,015
Other current assets
12,538
11,783
Total current assets
304,680
293,311
Pension asset
9,822
9,454
Goodwill and purchased intangibles - net
191,746
193,181
Property, plant and equipment - net
267,053
290,013
Other assets
20,871
8,854
Total assets
$ 794,172
$ 794,813
LIABILITIES AND SHAREHOLDERS' DEFICIT
Notes payable
$ 770
$ 672
Accounts payable
55,775
58,838
Accrued liabilities
78,541
69,763
Pension liability (current portion)
2,000
1,984
Nonpension postretirement benefits (current portion)
4,363
4,363
Other current liabilities
8,979
7,921
Long-term debt due within one year
9,873
9,843
Total current liabilities
160,301
153,384
Long-term debt
441,805
504,724
Pension liability
120,182
119,727
Nonpension postretirement benefits
65,428
64,780
Other liabilities
18,152
19,105
Total liabilities
805,868
861,720
Common stock, treasury stock, capital in excess of par value and warrants
257,127
254,161
Accumulated deficit
(141,631)
(205,344)
Accumulated other comprehensive loss
(127,192)
(115,724)
Total shareholders' deficit
(11,696)
(66,907)
Total liabilities and shareholders' deficit
$ 794,172
$ 794,813
LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Dollars in thousands)
(unaudited)
Three Months Ended June 30,
2010
2009
Operating activities:
Net income
$ 9,567
$ 2,664
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
10,568
10,518
Loss on asset disposals
185
23
Change in accounts receivable
(7,096)
(16,007)
Change in inventories
(3,896)
26,962
Change in accounts payable
5,078
2,156
Accrued interest and amortization of discounts, warrants and finance fees
10,585
(13,129)
Accrual of interest on PIK notes
-
11,916
Pension & nonpension postretirement benefits
(134)
194
Restructuring charges
2,827
(2,301)
Accrued liabilities & prepaid expenses
6,955
10,104
Accrued income taxes
3,405
(6,674)
Other operating activities
68
(1,720)
Net cash provided by operating activities
38,112
24,706
Investing activities:
Additions to property, plant and equipment
(7,231)
(4,610)
Proceeds from asset sales and other
-
21
Net cash used in investing activities
(7,231)
(4,589)
Financing activities:
Net (repayments) borrowings on ABL credit facility
-
(10,803)
Other repayments
(632)
(2,006)
Debt issuance costs and other
(1,455)
-
Net cash used in financing activities
(2,087)
(12,809)
Effect of exchange rate fluctuations on cash
(648)
311
Increase in cash
28,146
7,619
Cash at beginning of period
18,027
16,463
Cash at end of period
$ 46,173
$ 24,082
LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Dollars in thousands)
(unaudited)
Six Months Ended June 30,
2010
2009
Operating activities:
Net income (loss)
$ 64,977
$ (25,229)
Adjustments to reconcile net income (loss) to net
cash (used in) provided by operating activities:
Depreciation and amortization
20,954
22,246
Loss on asset disposals
265
32
Change in accounts receivable
(13,612)
(15,597)
Change in inventories
(14,800)
38,246
Change in accounts payable
837
113
Accrued interest and amortization of discounts, warrants and finance fees
15,791
1,551
Accrual of interest on PIK notes
-
11,916
Gain on redemption of PIK Notes
(70,193)
-
Payment of interest on PIK Notes
(29,400)
-
Call premium on floating rate notes
8,415
-
Write-off of bank fees & discounts on old ABL and floating rate notes
4,986
-
Pension & nonpension postretirement benefits
2,871
3,165
Restructuring charges
2,396
(751)
Accrued liabilities & prepaid expenses
(2,513)
12,784
Accrued income taxes
(239)
(8,637)
Other operating activities
1,212
(749)
Net cash (used in) provided by operating activities
(8,053)
39,090
Investing activities:
Additions to property, plant and equipment
(11,379)
(9,550)
Call premium on floating rate notes
(8,415)
-
Proceeds from asset sales and other
-
88
Net cash used in investing activities
(19,794)
(9,462)
Financing activities:
Net (repayments) borrowings on ABL credit facility
-
(16,689)
Other repayments
(91)
(2,123)
Other borrowings
215
-
Floating rate note payments
(306,000)
-
PIK Note payment
(51,031)
-
Proceeds from senior secured notes
392,328
-
Debt issuance costs and other
(15,488)
-
Net cash provided by (used in) financing activities
19,933
(18,812)
Effect of exchange rate fluctuations on cash
(1,002)
(38)
(Decrease) increase in cash
(8,916)
10,778
Cash at beginning of period
55,089
13,304
Cash at end of period
$ 46,173
$ 24,082
In accordance with the SEC’s Regulation G, tables 1, 2, 3 and 4 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 June 30,
2010
2009
As Reported
Special Items
As Adjusted
As Reported
Special Items
As Adjusted
Net sales
$ 203,036
$ -
$ 203,036
$ 195,826
$ -
$ 195,826
Freight billed to customers
420
-
420
399
-
399
Total revenues
203,456
-
203,456
196,225
-
196,225
Cost of sales
155,425
1,742
153,683
161,942
(2)
161,944
Gross profit
48,031
(1,742)
49,773
34,283
2
34,281
Selling, general and administrative expenses
24,719
-
24,719
22,514
200
22,314
Special charges
156
156
-
278
278
-
Income from operations
23,156
(1,898)
25,054
11,491
(476)
11,967
Other income
1,656
-
1,656
2,758
43
2,715
Earnings before interest and income taxes
24,812
(1,898)
26,710
14,249
(433)
14,682
Interest expense
11,768
-
11,768
17,532
-
17,532
Income (loss) before income taxes
13,044
(1,898)
14,942
(3,283)
(433)
(2,850)
Provision for (benefit from) income taxes
3,477
-
3,477
(5,947)
-
(5,947)
Net income
$ 9,567
$ (1,898)
$ 11,465
$ 2,664
$ (433)
$ 3,097
Net income per share:
Basic
$ 0.59
$ (0.12)
$ 0.70
$ 0.18
$ (0.03)
$ 0.21
Diluted
$ 0.47
$ (0.09)
$ 0.56
$ 0.18
$ (0.03)
$ 0.20
Weighted average shares:
Outstanding
16,352
14,882
Diluted
20,441
15,151
Three Months Ended June 30, 2010
Three Months Ended June 30, 2009
Total
Pension
Total
Restructuring
Special
Settlement
Restructuring
Special
Special Items Detail-(income) expense:
Charges (1)
Other (2)
Items
Charge (3)
Charges (1)
Items
Cost of sales
$ -
$ 1,742
$ 1,742
$ -
$ (2)
$ (2)
SG&A
-
-
-
200
-
200
Special charges
156
-
156
-
278
278
Other expense
-
-
-
-
(43)
(43)
Total Special Items
$ 156
$ 1,742
$ 1,898
$ 200
$ 233
$ 433
(1) Restructuring charges are related to the closure of our Syracuse, New York, manufacturing facility and our Mira Loma, California, distribution center.
(2) Other includes a write down of certain after-processing equipment within our International segment and other items.
(3) The pension settlement charges were triggered by excess lump sum distributions taken by employees, which required us to record unrecognized gains and losses in our pension plan accounts.
Table 2
Reconciliation of "As Reported" results to "As Adjusted" results - Six Months
(Dollars in thousands, except per-share amounts)
(unaudited)
Six Months Ended June 30,
2010
2009
As Reported
Special Items
As Adjusted
As Reported
Special Items
As Adjusted
Net sales
$ 376,940
$ -
$ 376,940
$ 353,679
$ -
$ 353,679
Freight billed to customers
854
-
854
744
-
744
Total revenues
377,794
-
377,794
354,423
-
354,423
Cost of sales
295,886
1,742
294,144
309,424
1,821
307,603
Gross profit
81,908
(1,742)
83,650
44,999
(1,821)
46,820
Selling, general and administrative expenses
47,543
-
47,543
44,888
2,700
42,188
Special charges
388
388
-
674
674
-
Income (loss) from operations
33,977
(2,130)
36,107
(563)
(5,195)
4,632
Gain on redemption of debt
56,792
56,792
-
-
-
-
Other income
893
(130)
1,023
2,721
(186)
2,907
Earnings before interest and income taxes
91,662
54,532
37,130
2,158
(5,381)
7,539
Interest expense
21,388
-
21,388
34,711
-
34,711
Income (loss) before income taxes
70,274
54,532
15,742
(32,553)
(5,381)
(27,172)
Provision for (benefit from) income taxes
5,297
-
5,297
(7,324)
-
(7,324)
Net income (loss)
$ 64,977
$ 54,532
$ 10,445
$ (25,229)
$ (5,381)
$ (19,848)
Net income (loss) per share:
Basic
$ 3.98
$ 3.34
$ 0.64
$ (1.70)
$ (0.36)
$ (1.34)
Diluted
$ 3.21
$ 2.69
$ 0.52
$ (1.70)
$ (0.36)
$ (1.34)
Weighted average shares:
Outstanding
16,308
14,812
Diluted
20,245
14,812
Six Months Ended June 30, 2010
Six Months Ended June 30, 2009
Gain on
Total
Pension
Total
PIK
Restructuring
Finance
Special
Settlement
Restructuring
Special
Special Items Detail-(income) expense:
Notes (1)
Charges (2)
Fees (3)
Other (4)
Items
Charge (5)
Charges (2)
Items
Cost of sales
$ -
$ -
$ -
$ 1,742
$ 1,742
$ -
$ 1,821
$ 1,821
SG&A
-
-
-
-
-
2,700
-
2,700
Special charges
-
388
-
-
388
-
674
674
Gain on redemption of debt
(70,193)
-
13,401
-
(56,792)
-
-
-
Other expense
-
130
-
-
130
-
186
186
Total Special Items
$ (70,193)
$ 518
$ 13,401
$ 1,742
$ (54,532)
$ 2,700
$ 2,681
$ 5,381
(1) Gain on PIK Notes is the difference between the carrying value and the face value of the PIK Notes when we redeemed them in February 2010.
(2) Restructuring charges are related to the closure of our Syracuse, New York, manufacturing facility and our Mira Loma, California, distribution center.
(3) Finance fees include the write-off of unamortized finance fees and discounts on the floating rate senior notes, unamortized finance fees on the refinanced credit facility and call premium
payments.
(4) Other includes a write down of certain after-processing equipment within our International segment and other items.
(5) The pension settlement charges were triggered by excess lump sum distributions taken by employees, which required us to record unrecognized gains and losses in our pension plan
accounts.
Table 3
Reconciliation of Net Income (Loss) to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA
(Dollars in thousands)
Three Months Ended June 30,
Six Months ended June 30,
2010
2009
2010
2009
Reported net income (loss)
$ 9,567
$ 2,664
$ 64,977
$ (25,229)
Add:
Interest expense
11,768
17,532
21,388
34,711
Provision for (benefit from) income taxes
3,477
(5,947)
5,297
(7,324)
Depreciation and amortization
10,568
10,518
20,954
22,246
EBITDA
35,380
24,767
112,616
24,404
Add:
Special Items before interest and taxes
1,898
433
(54,532)
5,381
Less: Depreciation expense included in Special Items and also in Depreciation and Amortization above
-
-
-
(705)
Adjusted EBITDA
$ 37,278
$ 25,200
$ 58,084
$ 29,080
Table 4
Reconciliation of Net Cash provided by (used in) Operating Activities to Free Cash Flow and Adjusted Free Cash Flow
(Dollars in thousands)
Three Months Ended June 30,
Six Months ended June 30,
2010
2009
2010
2009
Net cash provided by (used in) operating activities
$ 38,112
$ 24,706
$ (8,053)
$ 39,090
Capital expenditures
(7,231)
(4,610)
(11,379)
(9,550)
Proceeds from asset sales and other
-
21
-
88
Free Cash Flow
30,881
20,117
(19,432)
29,628
Payment of cash interest on PIK Notes
-
-
29,400
-
Adjusted Free Cash Flow
$ 30,881
$ 20,117
$ 9,968
$ 29,628
Table 5
Summary Business Segment information
(Dollars in thousands)
Three months ended June 30,
Six months ended June 30,
2010
2009
2010
2009
Net Sales:
North American Glass
$ 146,415
$ 137,744
$ 266,982
$ 246,487
North American Other
23,158
24,341
42,720
45,718
International
36,870
34,533
73,136
63,384
Eliminations
(3,407)
(792)
(5,898)
(1,910)
Consolidated Net Sales
$ 203,036
$ 195,826
$ 376,940
$ 353,679
Adjusted Earnings before Interest & Taxes (EBIT):
North American Glass
$ 23,506
$ 11,930
$ 31,533
$ 5,807
North American Other
4,745
3,691
8,256
5,017
International
(1,541)
(939)
(2,659)
(3,285)
Consolidated Adjusted EBIT
$ 26,710
$ 14,682
$ 37,130
$ 7,539
Adjusted Depreciation & Amortization: (1)
North American Glass
$ 6,169
$ 6,336
$ 12,282
$ 12,783
North American Other
192
243
386
881
International
4,207
3,939
8,286
7,877
Consolidated Adjusted Depreciation & Amortization
$ 10,568
$ 10,518
$ 20,954
$ 21,541
(1) Adjusted Depreciation & Amortization for YTD 2009 excludes $705 of depreciation expense that is included in Special Items below.
Special Items:
North American Glass
$ (945)
$ 172
$ (57,708)
$ 2,674
North American Other
156
261
489
2,707
International
2,687
-
2,687
-
Consolidated Special Items
$ 1,898
$ 433
$ (54,532)
$ 5,381
Reconciliation of Adjusted EBIT to Net Income (Loss):
Segment Adjusted EBIT
$ 26,710
$ 14,682
$ 37,130
$ 7,539
Special Items before interest and taxes
(1,898)
(433)
54,532
(5,381)
Interest Expense
(11,768)
(17,532)
(21,388)
(34,711)
Income Taxes
(3,477)
5,947
(5,297)
7,324
Net Income (Loss)
$ 9,567
$ 2,664
$ 64,977
$ (25,229)
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.
Mike
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