Libbey Inc. Announces Record Full-year 2012 Results; Also Announces Intent to Redeem $45.0 Million of Its 6.875 Percent Senior Secured Notes Due 2020 and Tentative Realignment of North American Production

TOLEDO, Ohio, Feb. 21, 2013  /PRNewswire/ --

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

Libbey Inc. (NYSE MKT: LBY) reported results today for the fourth quarter of 2012 and the full year.

Fourth-Quarter Highlights

  • Sales for the fourth quarter were $219.1 million, compared to $214.8 million for the fourth quarter of 2011, an increase of 2.0 percent (1.9 percent excluding currency fluctuation).
  • Sales in the Glass Operations segment were $201.3 million, compared to $199.2 million in the fourth quarter of 2011, an increase of 1.1 percent (0.9 percent excluding currency fluctuation).  Sales performance was led by a 5.0 percent increase in sales within our U.S. and Canada sales region.
  • Income from operations grew 34.8 percent, compared to the fourth quarter of 2011, increasing to $13.1 million from $9.7 million in the year-ago quarter.
  • Adjusted EBITDA increased 40.2 percent to $29.9 million, the highest fourth-quarter adjusted EBITDA since 2007.  In the fourth quarter of 2011, adjusted EBITDA was $21.3 million.

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

Fourth-Quarter Regional Sales and Operational Review

  • Glass Operations segment sales were led by a 5.0 percent increase in sales within our U.S. and Canada sales region and a 0.8 percent increase in sales within our China sales region (sales were essentially unchanged during the quarter excluding currency impact).  Sales within our Mexico sales region were lower by 5.6 percent, compared to the prior-year quarter (lower by 9.3 percent excluding the impact of currency).  The European sales region saw a 3.1 percent decrease in sales (a 0.8 percent increase excluding currency fluctuation). 
  • Sales to U.S. and Canadian foodservice glassware customers increased by 4.0 percent. Glassware sales to U.S. and Canadian retail customers increased 6.5 percent during the fourth quarter of 2012, while sales to business-to-business customers in the U.S. and Canada increased 3.7 percent.
  • Sales in the Other Operations segment increased 13.4 percent to $17.8 million, compared to $15.7 million in the prior-year quarter.  This increase was driven by solid sales increases to both Syracuse China and World Tableware customers during the quarter.
  • Interest expense decreased by $1.9 million to $8.6 million, compared to $10.5 million in the year-ago period, primarily driven by lower interest rates.
  • Our effective tax rate was 67.7 percent for the quarter-ended December 31, 2012, compared to a benefit of 296.6 percent for the quarter-ended December 31, 2011.  The effective tax rate was influenced by non-deductible foreign currency differences, an increase in foreign withholding taxes in jurisdictions with recorded valuation allowances, activity in jurisdictions with recorded valuation allowances, and changes in the mix of earnings with differing statutory rates.

Twelve-Month Highlights

  • Full-year sales for 2012 were $825.3 million, compared to $817.1 million in 2011, an increase of 1.0 percent (or 3.1 percent excluding currency fluctuation).
  • Sales in the Glass Operations segment were $753.0 million, compared to $746.6 million in 2011, an increase of 0.9 percent (3.1 percent excluding currency fluctuation).  Contributing to the increase was a 24.0 percent increase in sales within our China sales region (21.3 percent excluding currency impact) and a 4.1 percent increase in our U.S. and Canada sales region.
  • Income from operations in 2012 grew 28.1 percent, compared to the full year 2011, increasing to $81.3 million from $63.5 million in 2011.  
  • Adjusted EBITDA increased 17.1 percent to an all-time high for any year of $132.4 million, compared to $113.1 million for 2011.

Twelve-Month Regional Sales and Operational Review

  • Primary contributors to increased Glass Operations sales were a 24.0 percent increase in sales within our China sales region (21.3 percent excluding currency impact) and a 4.1 percent increase in sales within our U.S. and Canada sales region.  We reported sales that were 1.6 percent lower within our Mexico sales region; however, excluding currency impact, net sales in the Mexico sales region were 3.1 percent higher compared to the prior year.  We saw an 8.3 percent decrease in sales within our European sales region (only a 0.6 percent decrease excluding currency fluctuation). 
  • Sales to U.S. and Canadian foodservice glassware customers increased by 5.1 percent. Glassware sales to U.S. and Canadian retail customers increased 3.6 percent during 2012, while sales to business-to-business customers in the U.S. and Canada were 3.1 percent higher.
  • Sales in the Other Operations segment were $73.0 million, compared to $71.2 million in the prior year.  The prior year included net sales of $4.8 million of Traex® products that, as a result of the sale of substantially all of the assets of Traex in April 2011, were no longer offered for sale by the Company in 2012.  More than offsetting the absence of Traex® product sales in 2012 were increased sales to World Tableware customers of 9.0 percent and an even stronger 12.6 percent increase in sales to Syracuse China customers.
  • Interest expense decreased by $5.7 million to $37.7 million, compared to $43.4 million in the prior year, the result of lower interest rates in the last seven months of the year.
  • Our effective tax rate was 45.0 percent for the year-ended December 31, 2012, compared to 6.5 percent in 2011.  The effective tax rate was heavily influenced by non-deductible foreign currency losses related to our Mexican operations, an increase in foreign withholding taxes in jurisdictions with recorded valuation allowances, activity in jurisdictions with recorded valuation allowances and changes in the mix of earnings with differing statutory rates.

Working Capital and Liquidity

  • As of December 31, 2012, working capital, defined as inventories and accounts receivable less accounts payable, was $172.7 million, compared to $175.1 million at December 31, 2011. This decrease in working capital was primarily the result of lower accounts receivable and higher accounts payable.
  • Libbey reported that it had available capacity of $68.6 million under its ABL credit facility as of December 31, 2012, with no loans currently outstanding.  The Company also had cash on hand of $67.2 million at December 31, 2012.

Partial Redemption of Senior Notes

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

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

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

Tentative Realignment of North American Production

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

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

Webcast Information

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

About Libbey Inc.

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

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

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

 

Libbey Inc.

Condensed Consolidated Statements of Operations

(dollars in thousands, except per-share amounts)

(unaudited)



Three months ended December 31,


2012


2011

Net sales

$

219,061



$

214,782


Freight billed to customers

683



636


Total revenues

219,744



215,418


Cost of sales (1)

175,171



177,545


Gross profit

44,573



37,873


Selling, general and administrative expenses (1)

31,505



28,180


Income from operations

13,068



9,693


Other income (expense)(1)

547



(276)


Earnings before interest and income taxes

13,615



9,417


Interest expense

8,642



10,490


Income (loss) before income taxes

4,973



(1,073)


Provision for (benefit from) income taxes

3,366



(3,182)


Net income

$

1,607



$

2,109






Net income per share:




Basic

$

0.08



$

0.10


Diluted

$

0.07



$

0.10






Weighted average shares:




Outstanding

20,999



20,437


Diluted

21,555



20,860



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

 


Libbey Inc.

Condensed Consolidated Statements of Operations

(dollars in thousands, except per-share amounts)

(unaudited)



Year ended December 31,


2012


2011

Net sales

$

825,287



$

817,056


Freight billed to customers

3,165



2,396


Total revenues

828,452



819,452


Cost of sales (1)

633,267



650,713


Gross profit

195,185



168,739


Selling, general and administrative expenses (1)

113,896



105,545


Special charges (1)



(281)


Income from operations

81,289



63,475


Loss on redemption of debt (1)

(31,075)



(2,803)


Other income(1)

188



8,031


Earnings before interest and income taxes

50,402



68,703


Interest expense

37,727



43,419


Income before income taxes

12,675



25,284


Provision for income taxes (1)

5,709



1,643


Net income

$

6,966



$

23,641






Net income per share:




Basic

$

0.33



$

1.17


Diluted

$

0.33



$

1.14






Weighted average shares:




Outstanding

20,876



20,170


Diluted

21,315



20,808



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

 

Libbey Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands)



December 31, 2012


December 31, 2011


(unaudited)



ASSETS:




Cash and cash equivalents

$

67,208



$

58,291


Accounts receivable — net

80,850



88,045


Inventories — net

157,549



145,859


Other current assets

13,716



15,356


Total current assets

319,323



307,551






Pension asset

10,196



17,485


Goodwill and purchased intangibles — net

186,794



187,772


Property, plant and equipment — net

258,154



264,718


Other assets

32,618



28,881


Total assets

$

807,085



$

806,407






LIABILITIES AND SHAREHOLDERS' EQUITY:




Notes payable

$



$

339


Accounts payable

65,712



58,759


Accrued liabilities

84,268



88,761


Pension liability (current portion)

613



5,990


Non-pension postretirement benefits (current portion)

4,739



4,721


Other current liabilities

6,634



7,340


Long-term debt due within one year

4,583



3,853


Total current liabilities

166,549



169,763






Long-term debt

461,884



393,168


Pension liability

60,909



122,145


Non-pension postretirement benefits

71,468



68,496


Other liabilities

21,799



25,055


Total liabilities

782,609



778,627






Common stock and capital in excess of par value

313,586



311,188


Retained deficit

(148,070)



(155,036)


Accumulated other comprehensive loss

(141,040)



(128,372)


Total shareholders' equity

24,476



27,780


Total liabilities and shareholders' equity

$

807,085



$

806,407


 

Libbey Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)



Three months ended December 31,


2012


2011

Operating activities:




Net income

$

1,607



$

2,109


Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

10,574



9,923


Loss on asset sales and disposals

152



508


Change in accounts receivable

13,684



4,889


Change in inventories

14,128



23,935


Change in accounts payable

18,372



7,586


Accrued interest and amortization of discounts, warrants and finance fees

(6,965)



9,356


Pension & non-pension postretirement benefits

4,994



(488)


Accrued liabilities & prepaid expenses

(7,420)



(2,965)


Income taxes

2,669



(4,032)


Share-based compensation expense

855



651


Other operating activities

(523)



1,735


Net cash provided by operating activities

52,127



53,207






Investing activities:




Additions to property, plant and equipment

(15,476)



(14,963)


Net proceeds from sale of Traex



(522)


Proceeds from asset sales and other

97



(42)


Net cash used in investing activities

(15,379)



(15,527)






Financing activities:




Other repayments

(3,603)



(9,338)


Other borrowings



365


Proceeds from exercise of warrants



5,459


Stock options exercised

938



4


Debt issuance costs and other

(441)



(1)


Net cash used in financing activities

(3,106)



(3,511)


Effect of exchange rate fluctuations on cash

219



(461)


Increase in cash

33,861



33,708


Cash & cash equivalents at beginning of period

33,347



24,583


Cash & cash equivalents at end of period

$

67,208



$

58,291


 


Libbey Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)



Year ended December 31,


2012


2011

Operating activities:




Net income

$

6,966



$

23,641


Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

41,471



42,188


Loss (gain) on asset sales and disposals

446



(5,941)


Change in accounts receivable

7,187



3,076


Change in inventories

(10,969)



(221)


Change in accounts payable

6,285



403


Accrued interest and amortization of discounts, warrants and finance fees

(6,433)



3,047


Call premium on 10% senior notes

23,602



1,203


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

10,975



1,600


Pension & non-pension postretirement benefits

(76,344)



(9,074)


Restructuring charges



(828)


Accrued liabilities & prepaid expenses

322



1,917


Income taxes

1,628



(11,200)


Share-based compensation expense

3,321



5,016


Other operating activities

40



524


Net cash provided by operating activities

8,497



55,351






Investing activities:




Additions to property, plant and equipment

(32,720)



(41,420)


Net proceeds from sale of Traex



12,478


Proceeds from asset sales and other

647



5,222


Net cash used in investing activities

(32,073)



(23,720)






Financing activities:




Other repayments

(23,116)



(14,108)


Other borrowings

1,234



365


Proceeds from 6.875% senior notes

450,000




Payments on 10% senior notes

(360,000)



(40,000)


Call premium on 10% senior notes

(23,602)



(1,203)


Proceeds from exercise of warrants



5,459


Stock options exercised

1,231



482


Debt issuance costs and other

(13,475)



(463)


Net cash provided by (used in) financing activities

32,272



(49,468)


Effect of exchange rate fluctuations on cash

221



(130)


Increase (decrease) in cash

8,917



(17,967)


Cash & cash equivalents at beginning of year

58,291



76,258


Cash & cash equivalents at end of year

$

67,208



$

58,291


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

Table 1













Reconciliation of "As Reported" Results to "As Adjusted" Results - Quarter



(dollars in thousands, except per-share amounts)







(unaudited)















Three months ended December 31,



2012


2011



As Reported


Special Items


As Adjusted


As Reported


Special Items


As Adjusted

Net sales


$

219,061



$



$

219,061



$

214,782



$



$

214,782


Freight billed to customers


683





683



636





636


Total revenues


219,744





219,744



215,418





215,418


Cost of sales


175,171



913



174,258



177,545



817



176,728


Gross profit


44,573



(913)



45,486



37,873



(817)



38,690


Selling, general and administrative expenses


31,505



4,757



26,748



28,180



1,316



26,864


Income from operations


13,068



(5,670)



18,738



9,693



(2,133)



11,826


Other income (expense)


547





547



(276)



179



(455)


Earnings before interest and income taxes


13,615



(5,670)



19,285



9,417



(1,954)



11,371


Interest expense


8,642





8,642



10,490





10,490


Income (loss) before income taxes


4,973



(5,670)



10,643



(1,073)



(1,954)



881


Provision for (benefit from) income taxes


3,366





3,366



(3,182)





(3,182)


Net income


$

1,607



$

(5,670)



$

7,277



$

2,109



$

(1,954)



$

4,063















Net income per share:













Basic


$

0.08



$

(0.27)



$

0.35



$

0.10



$

(0.10)



$

0.20


Diluted


$

0.07



$

(0.26)



$

0.34



$

0.10



$

(0.09)



$

0.19















Weighted average shares:













Outstanding


20,999







20,437






Diluted


21,555







20,860






 



Three months ended December 31, 2012


Three months ended December 31, 2011

Special Items Detail

   (income) expense:


Pension Curtailment

& Settlement


Severance(1)


Total Special Items


CEO transition

expenses


Sale of

Traex (2)


Other (3)


Total Special Items

Cost of sales


$



$

913



$

913



$



$



$

817



$

817


SG&A


4,431



326



4,757



211





1,105



1,316


Other (income) expense










(179)





(179)


Total Special Items


$

4,431



$

1,239



$

5,670



$

211



$

(179)



$

1,922



$

1,954



(1) Relates to implementation of our new strategic plan.

(2) Adjustment to the gain on the sale of substantially all of the assets of Traex.

(3) Cost of sales reflects a write-down of unutilized fixed assets in our Glass Operations segment while SG&A contains severance.

 


Table 2













Reconciliation of "As Reported" Results to "As Adjusted" Results - Year



(dollars in thousands, except per-share amounts)







(unaudited)


Year ended December 31,



2012


2011



As Reported


Special Items


As Adjusted


As Reported


Special Items


As Adjusted

Net sales


$

825,287



$



$

825,287



$

817,056



$



$

817,056


Freight billed to customers


3,165





3,165



2,396





2,396


Total revenues


828,452





828,452



819,452





819,452


Cost of sales


633,267



3,255



630,012



650,713



2,841



647,872


Gross profit


195,185



(3,255)



198,440



168,739



(2,841)



171,580


Selling, general and administrative expenses


113,896



6,201



107,695



105,545



3,914



101,631


Special charges








(281)



(281)




Income from operations


81,289



(9,456)



90,745



63,475



(6,474)



69,949


Loss on redemption of debt


(31,075)



(31,075)





(2,803)



(2,803)




Other income


188





188



8,031



7,079



952


Earnings before interest and income taxes


50,402



(40,531)



90,933



68,703



(2,198)



70,901


Interest expense


37,727





37,727



43,419





43,419


Income before income taxes


12,675



(40,531)



53,206



25,284



(2,198)



27,482


Provision for income taxes


5,709



(26)



5,735



1,643





1,643


Net income


$

6,966



$

(40,505)



$

47,471



$

23,641



$

(2,198)



$

25,839















Net income per share:













Basic


$

0.33



$

(1.94)



$

2.27



$

1.17



$

(0.11)



$

1.28


Diluted


$

0.33



$

(1.90)



$

2.23



$

1.14



$

(0.11)



$

1.24















Weighted average shares:













Outstanding


20,876







20,170






Diluted


21,315







20,808






 



Year ended December 31, 2012


Year ended December 31, 2011

Special Items Detail-

  (income) expense:


Finance

Fees (1)


Severance(2)


Pension Curtailment

& Settlement


Total

Special

Items


Sale of Land & Traex(3)


CEO transition

expenses(4)


Finance

Fees (1)


Abandoned 

Property (5)


Other(6)


Total

Special

Items

Cost of sales


$



$

3,255



$



$

3,255



$



$



$



$

1,827



$

1,014



$

2,841


SG&A




1,895



4,306



6,201





2,722





892



300



3,914


Special charges


















(281)



(281)


Loss on redemption of debt


31,075







31,075







2,803







2,803


Other income










(6,863)









(216)



(7,079)


Income taxes




(26)





(26)














Total Special Items


$

31,075



$

5,124



$

4,306



$

40,505



$

(6,863)



$

2,722



$

2,803



$

2,719



$

817



$

2,198



(1) Finance fees for 2012 include the write-off of unamortized finance fees and discounts and call premium payments on the ABL Facility and $360.0 million senior notes redeemed in May and June 2012, partially offset by the write-off of the debt carrying value adjustment related to the termination of the $80.0 million interest rate swap. Finance fees for 2011 include the write-off of unamortized finance fees and discounts and call premium payments on the $40.0 million senior notes redeemed in March 2011.

(2) Relates to implementation of our new strategic plan.

(3) Net gain on the sale of land at our Libbey Holland facility of $3,445 and net gain on sale of substantially all of the assets of Traex of $3,418.

(4) CEO transition expenses primarily represent non-cash charges related to accelerated vesting of previously issued equity compensation.

(5) Estimate accrued for an on-going unclaimed property audit.

(6) Cost of sales includes $197 of restructuring charges and a $817 write-down of unutilized fixed assets in our Glass Operations segment. SG&A includes severance of $1,105, net of an equipment credit of $805. Special charges relate to the closure of our Syracuse, New York, manufacturing facility and the decorating operations at our Shreveport manufacturing facility.

 

Table 3









Reconciliation of Net Income to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA

(dollars in thousands)




















Three months ended December 31,


Year ended December 31,



2012


2011


2012


2011

Reported net income


$

1,607



$

2,109



$

6,966



$

23,641


Add:









Interest expense


8,642



10,490



37,727



43,419


Provision for (benefit from) income taxes


3,366



(3,182)



5,709



1,643


Depreciation and amortization


10,574



9,923



41,471



42,188


EBITDA


24,189



19,340



91,873



110,891


Add: Special items before interest and taxes


5,670



1,954



40,531



2,198


Adjusted EBITDA


$

29,859



$

21,294



$

132,404



$

113,089


 

Table 4









Reconciliation of Net Cash provided by Operating Activities to Free Cash Flow

(dollars in thousands)











Three months ended December 31,


Year ended December 31,



2012


2011


2012


2011










Net cash provided by operating activities


$

52,127



$

53,207



$

8,497



$

55,351


Capital expenditures


(15,476)



(14,963)



(32,720)



(41,420)


Net proceeds from sale of Traex




(522)





12,478


Proceeds from asset sales and other


97



(42)



647



5,222


Free Cash Flow


$

36,748



$

37,680



$

(23,576)



$

31,631


 


Table 5









Summary Business Segment Information





(dollars in thousands)











Three months ended December 31,


Year ended December 31,



2012


2011


2012


2011

Net Sales:









Glass Operations(1)


$

201,327



$

199,228



$

753,006



$

746,581


Other Operations(2)


17,842



15,735



72,965



71,183


Eliminations


(108)



(181)



(684)



(708)


Consolidated


$

219,061



$

214,782



$

825,287



$

817,056











Segment Earnings before

  Interest & Taxes (Segment EBIT)(3)











Glass Operations(1)


$

24,211



$

19,551



$

118,470



$

96,716


Other Operations(2)


2,950



2,355



14,047



11,974


Segment EBIT


$

27,161



$

21,906



$

132,517



$

108,690











Reconciliation of Segment EBIT to Net Income:









Segment EBIT


$

27,161



$

21,906



$

132,517



$

108,690


Retained corporate costs (4)


(7,876)



(10,535)



(41,584)



(37,789)


Consolidated Adjusted EBIT


19,285



11,371



90,933



70,901


Loss on redemption of debt






(31,075)



(2,803)


Severance


(1,239)



(1,105)



(5,150)



(1,105)


Pension curtailment and settlement charge


(4,431)





(4,306)




Gain on sale of Traex assets




179





3,418


Gain on sale of land








3,445


Equipment write-down




(817)





(817)


Equipment credit








1,021


Restructuring charges








84


CEO transition expenses




(211)





(2,722)


Abandoned property








(2,719)


Special Items before interest and taxes


(5,670)



(1,954)



(40,531)



(2,198)


Interest expense


(8,642)



(10,490)



(37,727)



(43,419)


Income taxes


(3,366)



3,182



(5,709)



(1,643)


Net income


$

1,607



$

2,109



$

6,966



$

23,641











Depreciation & Amortization:









Glass Operations(1)


$

10,423



$

9,619



$

40,184



$

40,398


Other Operations(2)


8



8



40



265


Corporate


143



296



1,247



1,525


Consolidated


$

10,574



$

9,923



$

41,471



$

42,188




(1) Glass Operations—includes worldwide sales of manufactured and sourced glass tableware from domestic and international subsidiaries.


(2) Other Operations—includes worldwide sales of sourced ceramic dinnerware, metal tableware, hollowware and serveware. Plastic items were sold through April 28, 2011.


(3) Segment EBIT represents earnings before interest and taxes and excludes amounts related to certain items we consider not representative of ongoing operations, as well as, certain retained corporate costs.


(4) Retained corporate costs includes certain headquarter, administrative and facility costs, and other costs that are not allocable to the reporting segments.



Table 6





Reconciliation of Net Income to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA and Debt Net of Cash to Adjusted EBITDA Ratio

(dollars in thousands)





(unaudited)







Year ended December 31,



2012


2011

Reported net income


$

6,966



$

23,641


Add:





Interest expense


37,727



43,419


Provision for income taxes


5,709



1,643


Depreciation and amortization


41,471



42,188


EBITDA


91,873



110,891


Add: Special items before interest and taxes


40,531



2,198


Adjusted EBITDA


$

132,404



$

113,089







Debt


$

466,467



$

397,360


Plus: Unamortized discount and warrants




4,300


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

408



4,043


Gross debt


466,059



397,617


Cash


67,208



58,291


Debt net of cash


$

398,851



$

339,326









Debt net of cash to Adjusted EBITDA ratio


3.0 x



3.0 x


 

SOURCE Libbey Inc.



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