FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2009
OR
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o |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
Commission file number 1-12084
(Exact name of registrant as specified in its charter)
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Delaware
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34-1559357 |
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.) |
300 Madison Avenue, Toledo, Ohio 43604
(Address of principal executive offices) (Zip Code)
419-325-2100
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes o
No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer o |
Accelerated Filer þ |
Non-Accelerated Filer o (Do not check if a smaller reporting company) |
Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date.
Common Stock, $.01 par value 14,755,997 shares at April 30, 2009.
TABLE OF CONTENTS
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36 |
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41 |
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41 |
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Certification |
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Certification |
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Certification |
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Certification |
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EX-31.1 |
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EX-31.2 |
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EX-32.1 |
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EX-32.2 |
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EX-31.1 |
EX-31.2 |
EX-32.1 |
EX-32.2 |
2
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited Condensed Consolidated Financial Statements of Libbey Inc. and all
majority-owned subsidiaries (collectively, Libbey or the Company) have been prepared in accordance
with U.S. Generally Accepted Accounting Principles (U.S. GAAP) for interim financial information
and with the instructions to Form 10-Q and Item 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by U.S. GAAP for complete financial
statements. In the opinion of management, all adjustments (including normal recurring accruals)
considered necessary for a fair presentation have been included. Operating results for the
three-month period ended March 31, 2009 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2009.
The balance sheet at December 31, 2008 has been derived from the audited financial statements at
that date but does not include all of the information and footnotes required by U.S. GAAP for
complete financial statements.
For further information, refer to the consolidated financial statements and footnotes thereto
included in the Companys Annual Report on Form 10-K for the year ended December 31, 2008.
3
LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per-share amounts)
(unaudited)
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Three months ended March 31, |
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2009 |
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2008 |
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Net sales |
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$ |
157,853 |
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$ |
187,276 |
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Freight billed to customers |
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345 |
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668 |
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Total revenues |
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158,198 |
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187,944 |
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Cost of sales |
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147,482 |
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157,607 |
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Gross profit |
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10,716 |
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30,337 |
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Selling, general and administrative expenses |
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22,374 |
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20,859 |
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Special charges |
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396 |
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(Loss) income from operations |
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(12,054 |
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9,478 |
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Other (expense) income |
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(37 |
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753 |
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(Loss) earnings before interest and income taxes |
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(12,091 |
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10,231 |
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Interest expense |
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17,179 |
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17,151 |
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Loss before income taxes |
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(29,270 |
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(6,920 |
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Benefit from income taxes |
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(1,377 |
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(3,443 |
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Net loss |
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$ |
(27,893 |
) |
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$ |
(3,477 |
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Net loss per share: |
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Basic |
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$ |
(1.89 |
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$ |
(0.24 |
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Diluted |
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$ |
(1.89 |
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$ |
(0.24 |
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Dividends per share |
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$ |
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$ |
0.025 |
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See accompanying notes
4
LIBBEY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share amounts)
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March 31, 2009 |
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December 31, 2008 |
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(unaudited) |
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Assets |
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Current assets: |
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Cash and equivalents |
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$ |
16,463 |
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$ |
13,304 |
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Accounts receivable net |
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74,555 |
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76,072 |
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Inventories net |
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169,426 |
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185,242 |
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Prepaid and other current assets |
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16,314 |
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17,167 |
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Total current assets |
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276,758 |
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291,785 |
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Other assets: |
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Pension asset |
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8,640 |
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9,351 |
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Purchased intangible assets net |
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25,450 |
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26,121 |
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Goodwill |
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164,796 |
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166,736 |
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Other assets |
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12,132 |
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12,714 |
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Total other assets |
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211,018 |
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214,922 |
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Property, plant and equipment net |
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304,135 |
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314,847 |
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Total assets |
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$ |
791,911 |
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$ |
821,554 |
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Liabilities and Shareholders Equity |
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Current liabilities: |
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Notes payable |
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$ |
2,810 |
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$ |
3,284 |
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Accounts payable |
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50,896 |
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54,428 |
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Salaries and wages |
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21,616 |
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22,597 |
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Accrued liabilities |
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54,919 |
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39,675 |
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Accrued special charges |
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4,396 |
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4,248 |
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Pension liability (current portion) |
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1,778 |
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1,778 |
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Non-pension postretirement benefits (current portion) |
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4,684 |
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4,684 |
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Derivative liability |
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20,068 |
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17,936 |
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Deferred income taxes |
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1,320 |
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1,279 |
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Long-term debt due within one year |
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9,895 |
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1,117 |
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Total current liabilities |
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172,382 |
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151,026 |
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Long-term debt |
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528,151 |
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545,856 |
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Pension liability |
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110,002 |
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109,505 |
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Non-pension postretirement benefits |
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57,889 |
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57,197 |
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Deferred income taxes |
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3,231 |
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3,648 |
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Other long-term liabilities |
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12,271 |
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12,211 |
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Total liabilities |
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883,926 |
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879,443 |
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Shareholders equity: |
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Common stock, par value $.01 per share, 50,000,000 shares
authorized, 18,697,630
shares issued at March 31, 2009 and at December 31, 2008 |
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187 |
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187 |
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Capital in excess of par value (includes warrants of $1,034, based
on 485,309 shares
at March 31, 2009 and at December 31, 2008) |
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309,836 |
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309,275 |
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Treasury stock, at cost, 3,941,633 shares (3,967,486 shares in 2008) |
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(105,728 |
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(106,411 |
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Retained deficit |
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(173,710 |
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(145,154 |
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Accumulated other comprehensive loss |
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(122,600 |
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(115,786 |
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Total shareholders equity |
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(92,015 |
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(57,889 |
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Total liabilities and shareholders equity |
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$ |
791,911 |
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$ |
821,554 |
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See accompanying notes
5
LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
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Three months ended March 31, |
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2009 |
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2008 |
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Operating activities: |
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Net loss |
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$ |
(27,893 |
) |
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$ |
(3,477 |
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Adjustments to reconcile net loss to net cash provided by operating
activities: |
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Depreciation and amortization |
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11,728 |
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11,296 |
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Loss (gain) on asset sales |
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9 |
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(7 |
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Change in accounts receivable |
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410 |
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(230 |
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Change in inventories |
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11,284 |
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(11,020 |
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Change in accounts payable |
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(2,043 |
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(9,898 |
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Accrued interest and amortization of discounts, warrants and finance fees |
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14,680 |
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15,745 |
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Pension & non-pension postretirement benefits |
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2,971 |
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278 |
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Non-cash restructuring charges |
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1,550 |
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Payable to Vitro |
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(19,575 |
) |
Accrued salaries & wages |
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(680 |
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(6,760 |
) |
Accrued income taxes |
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(1,963 |
) |
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(5,586 |
) |
Other operating activities |
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4,331 |
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1,095 |
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Net cash provided by (used in) operating activities |
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14,384 |
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(28,139 |
) |
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Investing activities: |
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Additions to property, plant and equipment |
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(4,940 |
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(9,352 |
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Proceeds from asset sales and other |
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67 |
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41 |
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Net cash used in investing activities |
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(4,873 |
) |
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(9,311 |
) |
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Financing activities: |
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Net (repayments) borrowings on ABL credit facility activity |
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(5,886 |
) |
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9,068 |
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Other net payments |
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(117 |
) |
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(473 |
) |
Dividends |
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(364 |
) |
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Net cash (used in) provided by financing activities |
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(6,003 |
) |
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8,231 |
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Effect of exchange rate fluctuations on cash |
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(349 |
) |
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282 |
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Increase (decrease) in cash |
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3,159 |
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(28,937 |
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Cash at beginning of period |
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13,304 |
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36,539 |
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Cash at end of period |
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$ |
16,463 |
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$ |
7,602 |
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Supplemental disclosure of cash flows information: |
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Cash paid during the period for interest |
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$ |
1,136 |
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$ |
1,041 |
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Cash paid (received) net of refunds during the period for income taxes |
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$ |
1,201 |
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$ |
(19 |
) |
See accompanying notes
6
LIBBEY INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Dollars in thousands, except per share data
(unaudited)
1. Description of the Business
Libbey is the leading producer of glass tableware products in the Western Hemisphere, in addition
to supplying to key markets throughout the world. We produce glass tableware in five countries and
sell to customers in over 100 countries. We have the largest manufacturing, distribution and
service network among glass tableware manufacturers in the Western Hemisphere and are one of the
largest glass tableware manufacturers in the world. We design and market an extensive line of
high-quality glass tableware, ceramic dinnerware, metal flatware, hollowware and serveware, and
plastic items to a broad group of customers in the foodservice, retail and business-to-business
markets. We own and operate two glass tableware manufacturing plants in the United States as well
as glass tableware manufacturing plants in the Netherlands, Portugal, China and Mexico. We also own
and operate a plastics plant in Wisconsin. Until April 9, 2009, we operated a ceramic dinnerware
manufacturing facility in Syracuse, New York. In addition, we import products from overseas in
order to complement our line of manufactured items. The combination of manufacturing and
procurement allows us to compete in the global tableware market by offering an extensive product
line at competitive prices.
Our website can be found at www.libbey.com. We make available, free of charge, at this
website all of our reports filed or furnished pursuant to Section 13(a) or 15(d) of Securities
Exchange Act of 1934, including our annual report on Form 10-K, our quarterly reports on Form 10-Q,
our current reports on Form 8-K, as well as amendments to those reports. These reports are made
available on our website as soon as reasonably practicable after their filing with, or furnishing
to, the Securities and Exchange Commission and can also be found at
www.sec.gov.
Our shares are traded on the Over the Counter Bulletin Board (OTC BB) under the ticker symbol
LYBI.OB.
2. Significant Accounting Policies
See our Form 10-K for the year ended December 31, 2008 for a description of significant accounting
policies not listed below.
Basis of Presentation
The Condensed Consolidated Financial Statements include Libbey Inc. and its majority-owned
subsidiaries (collectively, Libbey or the Company). Our fiscal year end is December
31st. All material intercompany accounts and transactions have been eliminated. The
preparation of financial statements and related disclosures in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the amounts reported in the Condensed
Consolidated Financial Statements and accompanying notes. Actual results could differ materially
from managements estimates.
Condensed Consolidated Statements of Operations
Net sales in our Condensed Consolidated Statements of Operations include revenue earned when
products are shipped and title and risk of loss have passed to the customer. Revenue is recorded
net of returns, discounts and incentives offered to customers. Cost of sales includes cost to
manufacture and/or purchase products, warehouse, shipping and delivery costs and other costs.
Foreign Currency Translation
Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment, where
that local currency is the functional currency, are translated to U.S. dollars at exchange rates in
effect at the balance sheet date, with the resulting translation adjustments directly recorded to a
separate component of accumulated other comprehensive loss. Income and expense accounts are
translated at average exchange rates during the year. The effect of exchange rate changes on
transactions denominated in currencies other than the functional currency is recorded in other
(expense) income.
7
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred income tax assets and
liabilities are recognized for estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their
respective tax bases and tax attribute carry-forwards. Deferred income tax assets and liabilities
are measured using enacted tax rates in effect for the year in which those temporary differences
are expected to be recovered or settled. FAS No. 109, Accounting for Income Taxes, requires that
a valuation allowance be recorded when it is more likely than not that some portion or all of the
deferred income tax assets will not be realized.
Deferred income tax assets and liabilities are determined separately for each tax jurisdiction in
which we conduct our operations or otherwise incur taxable income or losses. In the United States
and China, we have recorded a full valuation allowance against our deferred income tax assets. In
addition, partial valuation allowances have been recorded in the Netherlands, Portugal and Mexico.
Stock-Based Compensation Expense
We account for stock-based compensation in accordance with SFAS No. 123-R, Accounting for
Stock-Based Compensation (SFAS No. 123-R). Stock-based compensation cost is measured based on
the fair value of the equity instruments issued. SFAS No. 123-R applies to all of our outstanding
unvested stock-based payment awards as of January 1, 2006, and all prospective awards using the
modified prospective transition method without restatement of prior periods. Stock-based
compensation expense charged to the Condensed Consolidated Statement of Operations for the three
months ended March 31, 2009, and the three months ended March 31, 2008, was $0.8 million and $1.0
million, respectively.
New Accounting Standards
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157). SFAS 157
defines fair value, establishes a framework for measuring fair value, and expands disclosure about
fair value measurements. This statement clarifies how to measure fair value as permitted under
other accounting pronouncements but does not require any new fair value measurements. In February
2008, the FASB issued FASB Staff Position 157-2, Effective Date of FASB Statement No. 157
(FSP157-2), which delayed until January 1, 2009 the effective date of SFAS 157 for nonfinancial
assets and liabilities, except for those that are recognized or disclosed at fair value in the
financial statements on a recurring basis. In October 2008, the FASB issued FASB Staff Position
157-3, Determining the Fair Value of a Financial Asset when the Market for That Asset is Not
Active (FSP 157-3), which clarifies the application of SFAS 157 as it relates to the valuation
of financial assets in a market that is not active for those financial assets. FSP 157-3 was
effective upon issuance. We adopted SFAS 157 as of January 1, 2008, but had not applied it to
non-recurring, nonfinancial assets and liabilities. The adoption of SFAS 157 and its related FSPs
(FSP 157-2 and FSP 157-3) had no impact on our consolidated results of operations and financial
condition. We adopted SFAS 157 for nonfinancial assets and liabilities as of January 1, 2009. The
adoption of SFAS 157 for nonfinancial assets and liabilities did not have a material impact on our
consolidated financial statements. See note 13 of the Condensed Consolidated Financial Statements
for additional information.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial
Statements (SFAS 160), which changes the accounting and reporting standards for the
noncontrolling interests in a subsidiary in consolidated financial statements. SFAS 160
re-characterizes minority interests as noncontrolling interests and requires noncontrolling
interests to be classified as a component of shareholders equity. We adopted SFAS 160 as of
January 1, 2009. The adoption of SFAS 160 did not have any impact on our consolidated financial
statements.
In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging
Activities, an amendment of FASB Statement No. 133 (SFAS 161), which requires additional
disclosures about the objectives of the derivative instruments and hedging activities, the method
of accounting for such instruments under SFAS No. 133 and its related interpretations, and a
tabular disclosure of the effects of such instruments and related hedged items on our financial
position, financial performance, and cash flows. SFAS 161 encourages, but does not require,
comparative disclosures for earlier periods at initial adoption. SFAS 161 was effective for Libbey
on January 1, 2009. Since SFAS 161 only requires additional disclosures, adoption of this
statement did not have a material impact on our consolidated financial statements. See note 9 of
the Condensed Consolidated Financial Statements for additional information.
8
In April 2008, the FASB issued Staff Position No. FAS 142-3, Determination of the Useful Life of
Intangible Assets (FSP 142-3), which amends the factors that should be considered in developing
renewal or extension assumptions used to determine the useful life
of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible
Assets. FSP 142-3 was effective for Libbey on January 1, 2009. The adoption of FSP 142-3 did not
have a material impact on our consolidated financial statements.
In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting
Principles (SFAS 162), which identifies the sources of accounting principles and the framework
for selecting the principles to be used in the preparation of financial statements. The
hierarchical guidance provided by SFAS 162 did not have a significant impact on our consolidated
financial statements.
In June 2008, the FASB ratified EITF Issue No. 07-5, Determining Whether an Instrument (or an
Embedded Feature) Is Indexed to an Entitys Own Stock (EITF 07-5). EITF 07-5 provides that an
entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or
embedded feature) is indexed to its own stock, including evaluating the instruments contingent
exercise and settlement provisions. It also clarifies the impact of foreign currency denominated
strike prices and market-based employee stock option valuation instruments on the evaluation. EITF
07-5 was effective for Libbey on January 1, 2009. The adoption of EITF 07-5 did not have any impact
on our consolidated financial statements.
In June 2008, the FASB issued FASB Staff Position No. EITF 03-6-1, Determining Whether
Instruments Granted in Share-Based Payment Transactions are Participating Securities (FSP
03-6-1). FSP 03-6-1 addresses whether instruments granted in share-based payment transactions are
participating securities prior to vesting, and therefore need to be included in the earnings
allocation in computing earnings per share (EPS) under the two-class method described in paragraphs
60 and 61 of SFAS No. 128, Earnings per Share. FSP 03-6-1 was effective for Libbey on January 1,
2009, and requires that all prior period EPS data is adjusted retrospectively. The adoption of FSP
03-6-1 did not have a material impact on our consolidated financial statements.
In December 2008, the FASB issued FASB Staff Position 132(R)-1, Employers Disclosures about
Postretirement Benefit Plan Assets (FSP 132(R)-1). FSP 132(R)-1 amends FASB Statement No. 132
(revised 2003), Employers Disclosures about Pensions and Other Postretirement Benefits, to
provide guidance on an employers disclosures about plan assets of a defined benefit pension or
other postretirement plan. FSP 132(R)-1 is effective for financial statements issued for fiscal
years ending after December 15, 2009. We are currently evaluating the potential impact of the
adoption of FSP 132(R)-1, and it is likely that the adoption of this guidance will increase the
disclosures in the financial statements related to the assets of our pension and other
postretirement benefit plans.
Reclassifications
Certain amounts in the prior years financial statements may have been reclassified to conform to
the presentation used in the current year financial statements.
9
3. Balance Sheet Details
The following table provides detail of selected balance sheet items:
|
|
|
|
|
|
|
|
|
(Dollars in thousands) |
|
March 31, 2009 |
|
December 31, 2008 |
|
Accounts receivable: |
|
|
|
|
|
|
|
|
Trade receivables |
|
$ |
73,690 |
|
|
$ |
74,393 |
|
Other receivables |
|
|
865 |
|
|
|
1,679 |
|
|
Total accounts receivable, less allowances of $9,449 and $10,479 |
|
$ |
74,555 |
|
|
$ |
76,072 |
|
|
Inventories: |
|
|
|
|
|
|
|
|
Finished goods |
|
$ |
152,384 |
|
|
$ |
163,817 |
|
Work in process |
|
|
1,656 |
|
|
|
2,805 |
|
Raw materials |
|
|
4,319 |
|
|
|
5,748 |
|
Repair parts |
|
|
9,326 |
|
|
|
10,271 |
|
Operating supplies |
|
|
1,741 |
|
|
|
2,601 |
|
|
Total inventories, less allowances of $5,160 and $6,582 |
|
$ |
169,426 |
|
|
$ |
185,242 |
|
|
Prepaid and other current assets: |
|
|
|
|
|
|
|
|
Prepaid expenses |
|
$ |
13,364 |
|
|
$ |
14,865 |
|
Refundable and prepaid income taxes |
|
|
2,950 |
|
|
|
2,302 |
|
|
Total prepaid and other current assets |
|
$ |
16,314 |
|
|
$ |
17,167 |
|
|
Other assets: |
|
|
|
|
|
|
|
|
Deposits |
|
$ |
394 |
|
|
$ |
43 |
|
Finance fees net of amortization |
|
|
7,373 |
|
|
|
8,183 |
|
Other |
|
|
4,365 |
|
|
|
4,488 |
|
|
Total other assets |
|
$ |
12,132 |
|
|
$ |
12,714 |
|
|
Accrued liabilities: |
|
|
|
|
|
|
|
|
Accrued incentives |
|
$ |
16,755 |
|
|
$ |
12,760 |
|
Workers compensation |
|
|
10,127 |
|
|
|
9,384 |
|
Medical liabilities |
|
|
2,715 |
|
|
|
2,736 |
|
Interest |
|
|
18,019 |
|
|
|
4,575 |
|
Commissions payable |
|
|
844 |
|
|
|
1,135 |
|
Accrued liabilities |
|
|
6,459 |
|
|
|
9,085 |
|
|
Total accrued liabilities |
|
$ |
54,919 |
|
|
$ |
39,675 |
|
|
Other long-term liabilities: |
|
|
|
|
|
|
|
|
Derivative liability |
|
$ |
4,431 |
|
|
$ |
3,693 |
|
Deferred liability |
|
|
958 |
|
|
|
1,566 |
|
Other |
|
|
6,882 |
|
|
|
6,952 |
|
|
Total other long-term liabilities |
|
$ |
12,271 |
|
|
$ |
12,211 |
|
|
10
4. Borrowings
On June 16, 2006, Libbey Glass Inc. issued $306.0 million aggregate principal amount of floating
rate senior secured notes (Senior Notes) due June 1, 2011, and $102.0 million aggregate principal
amount of senior subordinated secured pay-in-kind notes (PIK Notes), due December 1, 2011.
Concurrently, Libbey Glass Inc. entered into a $150.0 million Asset Based Loan facility (ABL
Facility) expiring December 16, 2010.
Borrowings consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
(Dollars in thousands) |
|
Interest Rate |
|
Maturity Date |
|
2009 |
|
2008 |
|
Borrowings under ABL facility |
|
floating |
|
December 16, 2010 |
|
$ |
26,416 |
|
|
$ |
34,538 |
|
Senior notes |
|
floating |
(1) |
|
June 1, 2011 |
|
|
306,000 |
|
|
|
306,000 |
|
PIK notes (2) |
|
|
16.00 |
% |
|
December 1, 2011 |
|
|
148,946 |
|
|
|
148,946 |
|
Promissory note |
|
|
6.00 |
% |
|
April, 2009 to September, 2016 |
|
|
1,624 |
|
|
|
1,666 |
|
Notes payable |
|
floating |
|
April, 2009 |
|
|
2,810 |
|
|
|
3,284 |
|
RMB loan contract |
|
floating |
|
July, 2012 to January, 2014 |
|
|
36,625 |
|
|
|
36,675 |
|
RMB working capital loan |
|
floating |
|
March, 2010 |
|
|
7,325 |
|
|
|
7,335 |
|
Obligations under capital leases |
|
floating |
|
April, 2009 to May, 2009 |
|
|
118 |
|
|
|
302 |
|
BES Euro line |
|
floating |
|
January, 2010 to January, 2014 |
|
|
14,529 |
|
|
|
15,507 |
|
Other debt |
|
floating |
|
September, 2009 |
|
|
639 |
|
|
|
630 |
|
|
Total borrowings |
|
|
|
|
|
|
|
|
|
|
545,032 |
|
|
|
554,883 |
|
Less unamortized discounts and warrants |
|
|
|
|
|
|
|
|
|
|
4,176 |
|
|
|
4,626 |
|
|
Total borrowings net |
|
|
|
|
|
|
|
|
|
|
540,856 |
|
|
|
550,257 |
|
Less long term debt due within one year
and notes payable |
|
|
|
|
|
|
|
|
|
|
12,705 |
|
|
|
4,401 |
|
|
Total long-term portion of borrowings net |
|
|
|
|
|
|
|
|
|
$ |
528,151 |
|
|
$ |
545,856 |
|
|
|
|
|
(1) |
|
See Interest Rate Protection Agreements below. |
|
(2) |
|
Additional PIK notes were issued each June 1 and December 1, commencing on December 1,
2006, to pay semi-annual interest. During the first three years, interest is payable by
the issuance of additional PIK notes. |
ABL Facility
The ABL Facility is with a group of six banks and provides for a revolving credit and swing line
facility permitting borrowings for Libbey Glass and Libbey Europe up to an aggregate of $150.0
million, with Libbey Europes borrowings being limited to $75.0 million. Borrowings under the ABL
Facility mature December 16, 2010. Swing line borrowings are limited to $15.0 million, with swing
line borrowings for Libbey Europe being limited to 7.5 million. Loans comprising each CBFR (CB
Floating Rate) Borrowing, including each Swingline Loan, shall bear interest at the CB Floating
Rate plus the Applicable Rate, and euro-denominated swing line borrowings (Eurocurrency Loans) bear
interest calculated at the Netherlands swing line rate, as defined in the ABL Facility. The
Applicable Rates for CBFR Loans and Eurocurrency Loans vary depending on our aggregate remaining
availability. The Applicable Rates for CBFR Loans and Eurocurrency Loans were 0.25 percent and 2.00
percent, respectively, at March 31, 2009. There were no Libbey Glass borrowings under the facility
at March 31, 2009, while Libbey Europe had outstanding borrowings of $26.4 million at March 31,
2009, at an interest rate of 4.09 percent. Interest is payable on the last day of the interest
period, which can range from one month to six months.
All borrowings under the ABL Facility are secured by a first priority security interest in (i)
substantially all assets of (a) Libbey Glass and (b) substantially all of Libbey Glasss present
and future direct and indirect domestic subsidiaries, (ii) (a) 100 percent of the stock of Libbey
Glass, (b) 100 percent of the stock of substantially all of Libbey Glasss present and future
direct and indirect domestic subsidiaries, (c) 100 percent of the non-voting stock of substantially
all of Libbey Glasss first-tier present and future foreign subsidiaries and (d) 65 percent of the
voting stock of substantially all of Libbey Glasss first-tier present and future foreign
subsidiaries, and (iii) substantially all proceeds and products of the property and assets
described in clauses (i) and (ii) of this sentence.
11
Additionally, borrowings by Libbey Europe under the ABL Facility are secured by a first priority security interest in (i) substantially all of the assets of Libbey Europe, the parent of Libbey Europe and certain of its subsidiaries, (ii) 100 percent of the stock of Libbey Europe and certain subsidiaries of Libbey Europe, and (iii) substantially all proceeds and products
of the property and assets described in clauses (i) and (ii) of this sentence.
Libbey pays a quarterly Commitment Fee, as defined by the ABL Facility, on the total credit
provided under the Facility. The Commitment Fee varies depending on our aggregate availability. The
Commitment Fee was 0.25 percent at March 31, 2009. No compensating balances are required by the
Agreement. The Agreement does not require compliance with a fixed charge coverage ratio covenant,
unless aggregate unused availability falls below $15.0 million. If our aggregate unused ABL
availability were to fall below $15.0 million, the fixed charge coverage ratio requirement would be
1:10 to 1:00. The fixed charge coverage ratio is defined as the ratio of earnings before interest,
taxes, depreciation, amortization and minority interest (EBITDA) minus capital expenditures to
fixed charges (EBITDA minus capital expenditures / fixed charges). Among the items included in the
calculation of fixed charges are cash interest expense, scheduled principal payments on outstanding
debt and capital lease obligations, taxes paid in cash, dividends paid in cash and required cash
contributions to our pension plans in excess of expense.
The borrowing base under the ABL Facility is determined by a monthly analysis of the eligible
accounts receivable, inventory and fixed assets. The borrowing base is the sum of (a) 85 percent of
eligible accounts receivable, (b) the lesser of (i) 85 percent of the net orderly liquidation value
(NOLV) of eligible inventory, (ii) 65 percent of eligible inventory, or (iii) $75.0 million, and
(c) the lesser of $25.0 million and the aggregate of (i) 75 percent of the NOLV of eligible
equipment and (ii) 50 percent of the fair market value of eligible real property.
The available total borrowing base is offset by real estate and ERISA reserves totaling $9.2
million and mark-to-market reserves for natural gas and interest rate swaps of $17.7 million. The
ABL Facility also provides for the issuance of $30.0 million of letters of credit, which are
applied against the $150.0 million limit. At March 31, 2009, we had $8.4 million in letters of
credit outstanding under the ABL Facility. Remaining unused availability on the ABL Facility was
$49.0 million at March 31, 2009.
Senior Notes
Libbey Glass and Libbey Inc. entered into a purchase agreement pursuant to which Libbey Glass
agreed to sell $306.0 million aggregate principal amount of floating rate senior secured notes due
June 1, 2011 to the initial purchasers named in a private placement. The net proceeds of these
notes, after deducting a discount and the estimated expenses and fees, were approximately $289.8
million. On February 15, 2007, we exchanged $306.0 million aggregate principal amount of our
floating rate senior secured notes due June 1, 2011, which have been registered under the
Securities Act of 1933, as amended (Senior Notes), for the notes sold in the private placement. The
Senior Notes bear interest at a rate equal to six-month LIBOR plus 7.0 percent and were offered at
a discount of 2 percent of face value. Interest with respect to the Senior Notes is payable
semiannually on June 1 and December 1. The interest rate was 9.57 percent at March 31, 2009.
We have Interest Rate Protection Agreements (Rate Agreements) with respect to $200.0 million of
debt as a means to manage our exposure to fluctuating interest rates. The Rate Agreements
effectively convert this portion of our long-term borrowings from variable rate debt to fixed-rate
debt, thus reducing the impact of interest rate changes on future income. The fixed interest rate
for our borrowings related to the Rate Agreements at March 31, 2009, excluding applicable fees, is
5.24 percent per year and the total interest rate, including applicable fees, is 12.24 percent per
year. These Rate Agreements expire on December 1, 2009. Total remaining Senior Notes not covered
by the Rate Agreements have fluctuating interest rates with a weighted average rate of 9.57 percent
per year at March 31, 2009. If the counterparties to these Rate Agreements were to fail to perform,
these Rate Agreements would no longer protect us from interest rate fluctuations. However, we do
not anticipate nonperformance by the counterparties. All interest rate swap counterparties were
rated A+ or better, as of March 31, 2009, by Standard and Poors.
The fair market value for the Rate Agreements at March 31, 2009 was a $6.6 million liability. The
fair values of the Rate Agreements are based on the market standard methodology of netting the
discounted expected future variable cash receipts and the discounted future fixed cash payments.
The variable cash receipts are based on an expectation of future interest rates derived from
observed market interest rate forward curves. We do not expect to cancel these agreements and
expect them to expire as originally contracted.
The Senior Notes are guaranteed by Libbey Inc. and all of Libbey Glasss existing and future
domestic subsidiaries that guarantee any of Libbey Glasss debt or debt of any subsidiary guarantor
(see Note 11). The Senior Notes and related guarantees have the benefit of a second-priority lien,
subject to permitted liens, on collateral consisting of substantially all the tangible and
intangible assets of Libbey Glass and its domestic subsidiary guarantors that secure all of the
indebtedness under Libbey Glasss ABL Facility. The Collateral does not include the assets of
non-guarantor subsidiaries that secure the ABL Facility.
12
PIK Notes
Concurrently with the execution of the purchase agreement with respect to the Senior Notes, Libbey
Glass and Libbey Inc. entered into a purchase agreement (Unit Purchase Agreement) pursuant to which
Libbey Glass agreed to sell, to a purchaser named in the private placement, units consisting of
$102.0 million aggregate principal amount 16 percent senior subordinated secured pay-in-kind notes
due December 1, 2011 (PIK Notes) and detachable warrants to purchase 485,309 shares of Libbey Inc.
common stock (Warrants) exercisable on or after June 16, 2006 and expiring on December 1, 2011. The
warrant holders do not have voting rights. The net proceeds, after deducting a discount and
estimated expenses and fees, were approximately $97.0 million. The proceeds were allocated between
the Warrants and the underlying debt based on their respective fair values at the time of issuance.
The amount allocated to the Warrants has been recorded in equity, with the offset recorded as a
discount on the underlying debt. Each Warrant is exercisable at $11.25. The PIK Notes were offered
at a discount of 2 percent of face value. Interest is payable semiannually on June 1 and December
1, but during the first three years interest is payable by issuance of additional PIK Notes. At
March 31, 2009, the total principal amount of PIK notes was $148.9 million.
The obligations of Libbey Glass under the PIK Notes are guaranteed by Libbey Inc. and all of Libbey
Glasss existing and future domestic subsidiaries that guarantee any of Libbey Glasss debt or debt
of any subsidiary guarantor (see Note 11). The PIK Notes and related guarantees are senior
subordinated obligations of Libbey Glass and the guarantors of the PIK Notes and are entitled to
the benefit of a third-priority lien, subject to permitted liens, on the collateral that secures
the Senior Notes.
Promissory Note
In September 2001, we issued a $2.7 million promissory note in connection with the purchase of our
Laredo, Texas warehouse facility. At March 31, 2009, we had $1.6 million outstanding on the
promissory note. Interest with respect to the promissory note is paid monthly.
Notes Payable
We have overdraft lines of credit for a maximum of 2.3 million. The $2.8 million outstanding at
March 31, 2009, was the U.S. dollar equivalent under the euro-based overdraft line, and the
interest rate was 4.72 percent. Interest with respect to the note payable is paid monthly.
RMB Loan Contract
On January 23, 2006, Libbey Glassware (China) Co., Ltd. (Libbey China), an indirect wholly owned
subsidiary of Libbey Inc., entered into an RMB Loan Contract (RMB Loan Contract) with China
Construction Bank Corporation Langfang Economic Development Area Sub-Branch (CCB). Pursuant to the
RMB Loan Contract, CCB agreed to lend to Libbey China RMB 250.0 million, or the equivalent of
approximately $36.6 million, for the construction of our production facility in China and the
purchase of related equipment, materials and services. The loan has a term of eight years and bears
interest at a variable rate as announced by the Peoples Bank of China. As of the date of the
initial advance under the Loan Contract, the annual interest rate was 5.51 percent, and as of March
31, 2009, the annual interest rate was 6.60 percent. As of March 31, 2009, the outstanding balance
was RMB 250.0 million (approximately $36.6 million). Interest is payable quarterly. Payments of
principal in the amount of RMB 30.0 million (approximately $4.4 million) and RMB 40.0 million
(approximately $5.8 million) must be made on July 20, 2012, and December 20, 2012, respectively,
and three payments of principal in the amount of RMB 60.0 million (approximately $8.8 million) each
must be made on July 20, 2013, December 20, 2013, and January 20, 2014, respectively. The
obligations of Libbey China are secured by a guarantee executed by Libbey Inc. for the benefit of
CCB.
RMB Working Capital Loan
In March 2007, Libbey China entered into a RMB 50.0 million working capital loan with China
Construction Bank. The 3-year term loan has a principal payment at maturity on March 14, 2010, has
a current interest rate of 5.40 percent, and is secured by a Libbey Inc. guarantee. At March 31,
2009, the U.S. dollar equivalent on the line was $7.3 million. Interest is payable quarterly.
Obligations Under Capital Leases
We lease certain machinery and equipment under agreements that are classified as capital leases.
These leases were assumed in the Crisal acquisition. The cost of the equipment under capital leases
is included in the Condensed Consolidated Balance Sheet as
property, plant and equipment, and the related depreciation expense is included in the Condensed
Consolidated Statements of Operations.
13
The future minimum lease payments required under the capital leases as of March 31, 2009, are $0.1
million, all due within one year.
BES Euro Line
In January 2007, Crisal entered into a seven year, 11.0 million line of credit (approximately
$14.5 million) with BANCO ESPÍRITO SANTO, S.A. (BES). The $14.5 million outstanding at March 31,
2009 was the U.S. dollar equivalent under the line at an interest rate of 4.18 percent. Payment of
principal in the amount of 1.1 million (approximately $1.5 million) is due in January 2010,
payment of 1.6 million (approximately $2.1 million) is due in January 2011, payment of 2.2
million (approximately $2.9 million) is due in January 2012, payment of 2.8 million (approximately
$3.7 million) is due in January 2013 and payment of 3.3 million (approximately $4.3 million) is
due in January 2014. Interest with respect to the line is paid every six months.
Other Debt
The other debt of $0.6 million primarily consists of government-subsidized loans for equipment
purchases at Crisal.
Historically, cash flows generated from operations and our borrowing capacity under our ABL
facility have allowed us to meet our cash requirements, including capital expenditures and working
capital needs. Remaining unused availability on the ABL Facility was $49.0 million at March 31,
2009 and $44.6 million at December 31, 2008. We were impacted by recessionary pressures in 2008,
especially during the fourth quarter of the year and the current quarter of 2009, and we anticipate
that the global economic recession will continue throughout 2009 and perhaps beyond. In addition,
interest on our PIK Notes will be payable in cash beginning December 1, 2009. We began taking a
number of steps to enhance our liquidity in 2008, have continued with further steps in 2009
(including those announced in February, 2009), and have begun to see the benefits of these measures
in our positive free cash flow for the first quarter. However, if cash generated from operations
is insufficient to satisfy our liquidity requirements, we may seek to sell additional equity or
arrange additional debt financing. Global financial markets and economic conditions have been, and
continue to be, disrupted and volatile. The credit and capital markets have become distressed.
These issues, along with significant write-offs in the financial services sector, the re-pricing of
credit risk and the current weak economic conditions, have made it difficult, and will likely
continue to make it difficult, to obtain funding in future periods. If cash from operations and
cash available from our ABL Facility are not sufficient to meet our needs, we cannot assure you
that we will be able to obtain additional financing in sufficient amounts and/or on acceptable
terms in the near future or when our debt obligations reach maturity. Our ABL Facility expires in
December 2010, the Senior Notes expire in June 2011, and the PIK notes expire in December 2011.
Furthermore, because of the current price of our stock, we cannot anticipate that it would be
desirable to sell additional equity, even if we were able to do so. However, based upon our
operating plans and current forecast expectations (including expectations that the global economy
will not deteriorate further) we anticipate that we will generate positive cash flow from
operations and, if necessary, have sufficient cash availability from our ABL Facility to meet our
liquidity needs for at least one year.
5. Special Charges
In December 2008, we announced that the Syracuse China manufacturing facility and our Mira Loma,
California distribution center would be shut down in early to mid-2009 in order to reduce costs.
See Form 10-K for the year ended December 31, 2008 for further discussion. We incurred additional
charges of approximately $2.4 million in the three months ended March 31, 2009 related to these
planned closures. The Syracuse China facility was closed on April 9, 2009.
A charge of $1.1 million was incurred to write down certain raw materials and work in process
inventory that could not be converted to finished product. This amount was included in cost of
sales on the Condensed Consolidated Statement of Operations in the North American Other segment.
Additional depreciation expense of $0.7 million was recorded to reflect the shorter remaining
useful life of the assets. This amount was included in cost of sales on the Condensed Consolidated
Statement of Operations in the North American Other segment.
Special charges of $0.4 million included various legal, consulting and employee severance related
costs. This amount was included in special charges on the Condensed Consolidated Statement of
Operations in the North American Other segment.
14
Other (expense) income on the Condensed Consolidated Statement of Operations included a charge of
$0.2 million for the change in fair value of ineffective natural gas hedges related to our Syracuse
China operation. This amount was included in the North American Other segment.
The following table summarizes the facility closure charge in the first quarter of 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2009 |
|
|
|
North |
|
|
North |
|
|
|
|
|
|
American |
|
|
American |
|
|
|
|
(Dollars in thousands) |
|
Glass |
|
|
Other |
|
|
Total |
|
Inventory write-down |
|
$ |
|
|
|
$ |
1,118 |
|
|
$ |
1,118 |
|
Fixed asset depreciation |
|
|
|
|
|
|
705 |
|
|
|
705 |
|
|
|
|
|
|
|
|
|
|
|
Included in cost of sales |
|
|
|
|
|
|
1,823 |
|
|
|
1,823 |
|
Employee termination cost & other |
|
|
2 |
|
|
|
351 |
|
|
|
353 |
|
Fixed asset write-down |
|
|
|
|
|
|
43 |
|
|
|
43 |
|
|
|
|
|
|
|
|
|
|
|
Included in special charges |
|
|
2 |
|
|
|
394 |
|
|
|
396 |
|
Ineffectiveness of natural gas hedge |
|
|
|
|
|
|
(229 |
) |
|
|
(229 |
) |
|
|
|
|
|
|
|
|
|
|
Included in other (expense) income |
|
|
|
|
|
|
(229 |
) |
|
|
(229 |
) |
|
|
|
|
|
|
|
|
|
|
Total pretax charge |
|
$ |
2 |
|
|
$ |
2,446 |
|
|
$ |
2,448 |
|
|
|
|
|
|
|
|
|
|
|
The following reflects the balance sheet activity related to the facility closure charge or the
quarter ended March 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve |
|
|
|
Balances |
|
|
Total |
|
|
|
|
|
|
Inventory & |
|
|
|
|
|
|
Balances |
|
|
|
at December 31, |
|
|
Charge to |
|
|
Cash |
|
|
Fixed asset |
|
|
Non-cash |
|
|
at March 31, |
|
(Dollars in thousands) |
|
2008 |
|
|
Earnings |
|
|
Payments |
|
|
Write Downs |
|
|
Utilization |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory write-down |
|
$ |
|
|
|
$ |
1,118 |
|
|
$ |
|
|
|
$ |
(1,118 |
) |
|
$ |
|
|
|
$ |
|
|
Fixed asset depreciation |
|
|
|
|
|
|
705 |
|
|
|
|
|
|
|
|
|
|
|
(705 |
) |
|
|
|
|
Fixed asset write-down |
|
|
|
|
|
|
43 |
|
|
|
|
|
|
|
(43 |
) |
|
|
|
|
|
|
|
|
Employee termination cost & other |
|
|
4,248 |
|
|
|
353 |
|
|
|
(205 |
) |
|
|
|
|
|
|
|
|
|
|
4,396 |
|
Ineffectiveness of natural gas hedges |
|
|
|
|
|
|
229 |
|
|
|
|
|
|
|
|
|
|
|
(229 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
4,248 |
|
|
$ |
2,448 |
|
|
$ |
(205 |
) |
|
$ |
(1,161 |
) |
|
$ |
(934 |
) |
|
$ |
4,396 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The ending balance of $4.4 million at March 31, 2009 was included in accrued special charges on the
Condensed Consolidated Balance Sheets and we expect this to result in cash payments in 2009. These
charges were recorded in the North American Other and North American Glass reporting segments in
2009.
6. Income Taxes
The Companys effective tax rate differs from the United States statutory tax rate primarily due to
changes in the mix of earnings in countries with differing statutory tax rates, changes in accruals
related to uncertain tax positions, tax planning structures and changes in tax laws. Further, the
Companys current and future provision for (benefit from) income taxes for 2009 is significantly
impacted by
the valuation allowances. In the United States and China, we have recorded a full valuation
allowance against our deferred income tax assets. In addition, partial valuation allowances have
been recorded in the Netherlands, Portugal and Mexico. The Company intends to maintain these
allowances until it is more likely than not that the deferred income tax assets will be realized.
7. Pension and Non-pension Postretirement Benefits
We have pension plans covering the majority of our employees. Benefits generally are based on
compensation for salaried employees and job grade and length of service for hourly employees. Our
policy is to fund pension plans such that sufficient assets will be available to meet future
benefit requirements. In addition, we have an unfunded supplemental employee retirement plan (SERP)
that covers salaried U.S.-based employees of Libbey hired before January 1, 2006. The U.S. pension
plans cover the salaried U.S.-based employees of Libbey hired before January 1, 2006 and most
hourly U.S.-based employees. The non-U.S. pension plans cover the employees of our wholly owned
subsidiaries Royal Leerdam and Crisa. The Crisa plan is not funded.
15
The components of our net pension expense, including the SERP, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Plans |
|
Non-U.S. Plans |
|
Total |
Three months ended March 31, |
|
2009 |
|
2008 |
|
2009 |
|
2008 |
|
2009 |
|
2008 |
|
Service cost |
|
$ |
1,274 |
|
|
$ |
1,473 |
|
|
$ |
338 |
|
|
$ |
442 |
|
|
$ |
1,612 |
|
|
$ |
1,915 |
|
Interest cost |
|
|
4,097 |
|
|
|
3,930 |
|
|
|
1,037 |
|
|
|
1,226 |
|
|
|
5,134 |
|
|
|
5,156 |
|
Expected return on plan assets |
|
|
(4,526 |
) |
|
|
(4,375 |
) |
|
|
(632 |
) |
|
|
(830 |
) |
|
|
(5,158 |
) |
|
|
(5,205 |
) |
Amortization of unrecognized: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost (gain) |
|
|
560 |
|
|
|
585 |
|
|
|
(24 |
) |
|
|
(18 |
) |
|
|
536 |
|
|
|
567 |
|
Loss |
|
|
317 |
|
|
|
354 |
|
|
|
94 |
|
|
|
91 |
|
|
|
411 |
|
|
|
445 |
|
Settlement charge |
|
|
2,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500 |
|
|
|
|
|
|
Pension expense |
|
$ |
4,222 |
|
|
$ |
1,967 |
|
|
$ |
813 |
|
|
$ |
911 |
|
|
$ |
5,035 |
|
|
$ |
2,878 |
|
|
We incurred pension settlement charges of $2.5 million during the quarter ended March 31, 2009.
The pension settlement charges were triggered by excess lump sum distributions to retirees, which
required us to record unrecognized gains and losses in our pension plan accounts.
We provide certain retiree health care and life insurance benefits covering our U.S and Canadian
salaried and non-union hourly employees hired before January 1, 2004 and a majority of our union
hourly employees. Employees are generally eligible for benefits upon retirement and completion of a
specified number of years of creditable service. Benefits for most hourly retirees are determined
by collective bargaining. The U.S. non-pension postretirement plans cover the hourly and salaried
U.S.-based employees of Libbey. During the second quarter of 2008, we amended our U.S. non-pension
postretirement plans to cover employees and retirees of Syracuse China previously covered under a
multi-employer plan. This plan amendment was effective September 1, 2008. The non-U.S.
non-pension postretirement plans cover the retirees and active employees of Libbey who are located
in Canada. The postretirement benefit plans are not funded.
The provision for our non-pension postretirement benefit expense consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Plans |
|
Non-U.S. Plans |
|
Total |
Three months ended March 31, |
|
2009 |
|
2008 |
|
2009 |
|
2008 |
|
2009 |
|
2008 |
|
Service cost |
|
$ |
325 |
|
|
$ |
296 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
325 |
|
|
$ |
296 |
|
Interest cost |
|
|
937 |
|
|
|
713 |
|
|
|
29 |
|
|
|
28 |
|
|
|
966 |
|
|
|
741 |
|
Amortization of unrecognized: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service gain |
|
|
(128 |
) |
|
|
(136 |
) |
|
|
|
|
|
|
|
|
|
|
(128 |
) |
|
|
(136 |
) |
Loss / (Gain) |
|
|
205 |
|
|
|
48 |
|
|
|
(8 |
) |
|
|
(15 |
) |
|
|
197 |
|
|
|
33 |
|
|
Non-pension postretirement benefit
expense |
|
$ |
1,339 |
|
|
$ |
921 |
|
|
$ |
21 |
|
|
$ |
13 |
|
|
$ |
1,360 |
|
|
$ |
934 |
|
|
In 2009, we expect to utilize $20.8 million to fund our pension plans and pay for non-pension
postretirement benefits. Of that amount, $4.1 million was utilized in the three months ended March
31, 2009.
16
8. Net Income per Share of Common Stock
The following table sets forth the computation of basic and diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
Three Months |
|
|
Ended March 31, |
|
|
2009 |
|
2008 |
|
Numerator for earnings per share net loss that is
available to common shareholders |
|
$ |
(27,893 |
) |
|
$ |
(3,477 |
) |
|
Denominator for basic earnings per share
weighted average shares outstanding |
|
|
14,740,886 |
|
|
|
14,579,507 |
|
|
Effect of dilutive securities (1) |
|
|
|
|
|
|
|
|
|
Denominator for diluted earnings per share adjusted
weighted average shares and assumed conversions |
|
|
14,740,886 |
|
|
|
14,579,507 |
|
|
Basic loss per share |
|
$ |
(1.89 |
) |
|
$ |
(0.24 |
) |
|
Diluted loss per share |
|
$ |
(1.89 |
) |
|
$ |
(0.24 |
) |
|
|
|
|
(1) |
|
The effect of employee stock options, warrants, restricted stock units and the employee stock
purchase plan (ESPP) (289,976 and 360,529 shares for the three months ended March 31, 2009 and
2008, respectively), was anti-dilutive and thus not included in the earnings per share
calculation. These amounts would have been dilutive if not for the net loss. |
When applicable, diluted shares outstanding include the dilutive impact of in-the-money employee
stock options, which are calculated based on the average share price for each fiscal period using
the treasury stock method. Under the treasury stock method, the tax-effected proceeds that
hypothetically would be received from the exercise of all in-the-money options are assumed to be
used to repurchase shares.
9. Derivatives
We utilize derivative financial instruments to hedge certain interest rate risks associated with
our long-term debt, commodity price risks associated with forecasted future natural gas
requirements and foreign exchange rate risks associated with transactions denominated in a currency
other than the U.S. dollar. Most of these derivatives, except for certain natural gas contracts at
Syracuse China and the foreign currency contracts, qualify for hedge accounting since the hedges
are highly effective, and we have designated and documented contemporaneously the hedging
relationships involving these derivative instruments. Changes in fair value of these hedges are
recorded in Other Comprehensive Income (OCI). While we intend to continue to meet the conditions
for hedge accounting, if hedges do not qualify as highly effective or if we do not believe that the
forecasted transactions will occur, the changes in the fair value of the derivatives used as hedges
will be reflected in our earnings. All of these contracts were accounted for under FASB Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133).
We use Interest Rate Protection Agreements (Rate Agreements) to manage our exposure to variable
interest rates. These Rate Agreements effectively convert a portion of our borrowings from
variable rate debt to fixed-rate debt, thus reducing the impact of interest rate changes on future
results. These instruments are valued using the market standard methodology of netting the
discounted expected future variable cash receipts and the discounted future fixed cash payments.
The variable cash receipts are based on an expectation of future interest rates derived from
observed market interest rate forward curves.
We also use commodity futures contracts related to forecasted future North American natural gas
requirements. The objective of these futures contracts and other derivatives is to limit the
fluctuations in prices paid due to adverse price movements in the underlying commodity. We
consider our forecasted natural gas requirements in determining the quantity of natural gas to
hedge. We combine the forecasts with historical observations to establish the percentage of
forecast eligible to be hedged, typically ranging from 40 percent to 70 percent of our anticipated
requirements, up to eighteen months in the future. The fair values of these instruments are
determined from market quotes. Certain of our natural gas futures contracts are now classified as
ineffective, as the forecasted transactions are not probable of occurring due the closure of our
Syracuse China facility in April 2009.
Our foreign currency exposure arises from transactions denominated in a currency other than the
U.S. dollar, primarily associated with anticipated purchases of new equipment or net investment in
a foreign operation. The fair values of these instruments are determined from market quotes. The
values of these derivatives will change over time as cash receipts and payments are made and as
market conditions change.
17
Notional Amounts
As of March 31, 2009, we had commodity contracts for 4,580,000 million British Thermal Units (BTUs)
of natural gas. We also had Interest Rate Protection Agreements for $200.0 million of our variable
rate debt, as discussed in Note 4. At December 31, 2008, we had Interest Rate Protection
Agreements for $200.0 million of variable rate debt and commodity contracts for 5,280,000 million
BTUs of natural gas. In January 2008, we entered into a series of foreign currency contracts to
sell Canadian dollars. As of March 31, 2008, we had contracts for 6.8 million Canadian dollars.
During April 2007, we entered into a foreign currency contract for 212.0 million pesos for a
contractual payment due to Vitro in January 2008. As of December 31, 2008, all of these currency
contracts had expired.
Fair Values
The following table provides the fair values of our derivative financial instruments for the
periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liability Derivatives: |
|
|
|
March 31, 2009 |
|
|
December 31, 2008 |
|
Derivatives designated as |
|
Balance |
|
|
|
|
|
|
Balance |
|
|
|
|
hedging instruments |
|
Sheet |
|
|
Fair |
|
|
Sheet |
|
|
Fair |
|
under SFAS 133: |
|
Location: |
|
|
Value |
|
|
Location: |
|
|
Value |
|
|
Interest rate contracts |
|
Derivative liability |
|
$ |
6,586 |
|
|
Derivative liability |
|
$ |
6,762 |
|
Natural gas contracts |
|
Derivative liability |
|
|
13,482 |
|
|
Derivative liability |
|
|
11,174 |
|
Natural gas contracts |
|
Other long term liability |
|
|
4,431 |
|
|
Other long term liability |
|
|
3,693 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
$ |
24,499 |
|
|
|
|
|
|
$ |
21,629 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in value of derivatives
Most of our derivatives qualify and are designated as cash flow hedges (except certain natural gas
contracts at Syracuse China) at March 31, 2009. Hedge accounting is applied only when the
derivative is deemed to be highly effective at offsetting changes in fair values or anticipated
cash flows of the hedged item or transaction. For hedged forecasted transactions, hedge accounting
is discontinued if the forecasted transaction is no longer probable to occur, and any previously
deferred gains or losses would be recorded to earnings immediately. The ineffective portion of the
change in the fair value of a derivative designated as a cash flow hedge is recognized in current
earnings.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of derivative gain/ |
|
|
Gain / (loss) reclassified from Accumulated Other |
|
|
|
(loss) recognized in OCI |
|
|
Comprehensive Income (loss) to income (effective portion) |
|
|
|
(effective portion) |
|
|
Location |
|
|
Amount |
|
Derivatives in Cash Flow |
|
Three months ended March 31, |
|
|
|
|
|
|
Three months ended March 31, |
|
Hedging relationships: |
|
2009 |
|
|
2008 |
|
|
|
|
|
|
2009 |
|
|
2008 |
|
Interest rate contracts |
|
$ |
1,496 |
|
|
$ |
(3,919 |
) |
|
Cost of sales |
|
$ |
(3,774 |
) |
|
$ |
(1,132 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas contracts |
|
|
(6,421 |
) |
|
|
4,262 |
|
|
Total |
|
$ |
(3,774 |
) |
|
$ |
(1,132 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
(4,925 |
) |
|
$ |
343 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We incurred a charge of $1.3 million in interest expense on the Condensed Consolidated Statement of
Operations during the period ended March 31, 2009 related to contractual interest payments under
these Rate Agreements during the period.
Certain of our natural gas futures contracts are now classified as ineffective, as the forecasted
transactions are not probable of occurring due to the closure of our Syracuse China facility in
April 2009 as well as decreased production at some of our plants. As a result, $0.4 million was
charged to earnings in the period. That amount included an immaterial amount of expense which was
reclassified from Accumulated Other Comprehensive Income to earnings during the period ended March
31, 2009, as an immaterial amount of our natural gas futures contracts became ineffective.
18
The following table provides the impact on the Condensed Consolidated Statement of Operations from
derivatives no longer designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) recognized in income (ineffective portion) |
|
|
Three months ended March 31, |
|
Derivative |
|
Location |
|
|
2009 |
|
|
2008 |
|
|
Natural gas contracts |
|
Other (expense) income |
|
$ |
(399 |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
$ |
(399 |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
As the natural gas contracts mature, the accumulated gains (losses) for the respective contracts
are reclassified from accumulated OCI to current expense in cost of sales in our Condensed
Consolidated Statement of Operations. Similarly, as fixed interest payments are made pursuant to
the interest rate protection agreements, they are recorded together with the related receipt of
variable interest receipts, the payment of contractual interest expense to the banks and the
reclassification of accumulated gains (losses) from accumulated OCI related to the interest rate
agreements. Based on our current valuation, we estimate that accumulated losses currently carried
in accumulated OCI that will be reclassified into earnings over the next twelve months will result
in $19.6 million of expense in our Condensed Consolidated Statement of Operations.
Gains and losses for derivatives which were not designated as hedging instruments are recorded in
current earnings as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, |
|
Derivative |
|
Location |
|
|
2009 |
|
|
2008 |
|
|
Currency contracts |
|
Other (expense) income |
|
$ |
|
|
|
$ |
(170 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
(170 |
) |
|
|
|
|
|
|
|
|
|
|
|
We do not believe we are exposed to more than a nominal amount of credit risk in our interest rate
and natural gas hedges, as the counterparties are established financial institutions. The
counterparties are rated A+ or better for the Interest Rate Protection Agreements and AA- or better
for the other derivative agreements as of March 31, 2009, by Standard and Poors.
10. Comprehensive Income (Loss)
Components of comprehensive (loss) income (net of tax) are as follows:
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
March 31, |
|
|
|
2009 |
|
|
2008 |
|
|
Net loss |
|
$ |
(27,893 |
) |
|
$ |
(3,477 |
) |
Change in pension and nonpension postretirement liability, net of taxes of
$(2,575) and $406 in 2009 and 2008 respectively |
|
|
(955 |
) |
|
|
(1,057 |
) |
Change in fair value of derivatives, net of taxes of $(638) and $(523) in 2009
and 2008 respectively |
|
|
(1,789 |
) |
|
|
952 |
|
Exchange rate fluctuations |
|
|
(4,070 |
) |
|
|
7,027 |
|
|
|
|
|
|
|
|
Total comprehensive (loss) income |
|
$ |
(34,707 |
) |
|
$ |
3,445 |
|
|
|
|
|
|
|
|
19
Accumulated other comprehensive loss (net of tax) is as follows:
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2009 |
|
|
2008 |
|
|
Minimum pension liability and intangible pension asset |
|
$ |
(104,362 |
) |
|
$ |
(103,407 |
) |
Derivatives |
|
|
(18,399 |
) |
|
|
(16,610 |
) |
Exchange rate fluctuations |
|
|
161 |
|
|
|
4,231 |
|
|
|
|
|
|
|
|
Balance at end of period |
|
$ |
(122,600 |
) |
|
$ |
(115,786 |
) |
|
|
|
|
|
|
|
11. Condensed Consolidated Guarantor Financial Statements
Libbey Glass is a direct, 100 percent owned subsidiary of Libbey Inc. and the issuer of the Senior
Notes and the PIK Notes. The obligations of Libbey Glass under the Senior Notes and the PIK Notes
are fully and unconditionally and jointly and severally guaranteed by Libbey Inc. and by certain
indirect, 100 percent owned domestic subsidiaries of Libbey Inc., as described below. All are
related parties that are included in the Condensed Consolidated Financial Statements for the three
month period ended March 31, 2009 and March 31, 2008.
At March 31, 2009, December 31, 2008 and March 31, 2008, Libbey Inc.s indirect, 100 percent owned
domestic subsidiaries were Syracuse China Company, World Tableware Inc., LGA4 Corp., LGA3 Corp.,
The Drummond Glass Company, LGC Corp., Traex Company, Libbey.com LLC, LGFS Inc., LGAC LLC and Crisa
Industrial LLC (collectively, the Subsidiary Guarantors). The following tables contain Condensed
Consolidating Financial Statements of (a) the parent, Libbey Inc., (b) the issuer, Libbey Glass,
(c) the Subsidiary Guarantors, (d) the indirect subsidiaries of Libbey Inc. that are not Subsidiary
Guarantors (collectively, Non-Guarantor Subsidiaries), (e) the consolidating elimination entries,
and (f) the consolidated totals.
20
Libbey Inc.
Condensed Consolidating Statement of Operations
(dollars in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2009 |
|
|
Libbey |
|
Libbey |
|
|
|
|
|
Non- |
|
|
|
|
|
|
Inc. |
|
Glass |
|
Subsidiary |
|
Guarantor |
|
|
|
|
|
|
(Parent) |
|
(Issuer) |
|
Guarantors |
|
Subsidiaries |
|
Eliminations |
|
Consolidated |
|
Net sales |
|
$ |
|
|
|
$ |
82,766 |
|
|
$ |
21,377 |
|
|
$ |
63,109 |
|
|
$ |
(9,399 |
) |
|
$ |
157,853 |
|
Freight billed to customers |
|
|
|
|
|
|
111 |
|
|
|
205 |
|
|
|
29 |
|
|
|
|
|
|
|
345 |
|
|
Total revenues |
|
|
|
|
|
|
82,877 |
|
|
|
21,582 |
|
|
|
63,138 |
|
|
|
(9,399 |
) |
|
|
158,198 |
|
Cost of sales |
|
|
|
|
|
|
76,923 |
|
|
|
19,896 |
|
|
|
60,062 |
|
|
|
(9,399 |
) |
|
|
147,482 |
|
|
Gross profit |
|
|
|
|
|
|
5,954 |
|
|
|
1,686 |
|
|
|
3,076 |
|
|
|
|
|
|
|
10,716 |
|
Selling, general and administrative
expenses |
|
|
|
|
|
|
12,500 |
|
|
|
2,176 |
|
|
|
7,698 |
|
|
|
|
|
|
|
22,374 |
|
Special charges |
|
|
|
|
|
|
2 |
|
|
|
394 |
|
|
|
|
|
|
|
|
|
|
|
396 |
|
|
Income (loss) from operations |
|
|
|
|
|
|
(6,548 |
) |
|
|
(884 |
) |
|
|
(4,622 |
) |
|
|
|
|
|
|
(12,054 |
) |
Other income (expense) |
|
|
|
|
|
|
(54 |
) |
|
|
(262 |
) |
|
|
279 |
|
|
|
|
|
|
|
(37 |
) |
|
Earnings (loss) before interest and
income taxes |
|
|
|
|
|
|
(6,602 |
) |
|
|
(1,146 |
) |
|
|
(4,343 |
) |
|
|
|
|
|
|
(12,091 |
) |
Interest expense |
|
|
|
|
|
|
15,888 |
|
|
|
|
|
|
|
1,291 |
|
|
|
|
|
|
|
17,179 |
|
|
Earnings (loss) before income taxes |
|
|
|
|
|
|
(22,490 |
) |
|
|
(1,146 |
) |
|
|
(5,634 |
) |
|
|
|
|
|
|
(29,270 |
) |
Provision (benefit) for income taxes |
|
|
|
|
|
|
(1,087 |
) |
|
|
336 |
|
|
|
(626 |
) |
|
|
|
|
|
|
(1,377 |
) |
|
Net income (loss) |
|
|
|
|
|
|
(21,403 |
) |
|
|
(1,482 |
) |
|
|
(5,008 |
) |
|
|
|
|
|
|
(27,893 |
) |
Equity in net income (loss) of
subsidiaries |
|
|
(27,893 |
) |
|
|
(6,490 |
) |
|
|
|
|
|
|
|
|
|
|
34,383 |
|
|
|
|
|
|
Net income (loss) |
|
$ |
(27,893 |
) |
|
$ |
(27,893 |
) |
|
$ |
(1,482 |
) |
|
$ |
(5,008 |
) |
|
$ |
34,383 |
|
|
$ |
(27,893 |
) |
|
The following represents the total special charges included in the above Condensed Consolidated
Statement of Operations (see note 5):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2009 |
|
|
Libbey |
|
Libbey |
|
|
|
|
|
Non- |
|
|
|
|
|
|
Inc. |
|
Glass |
|
Subsidiary |
|
Guarantor |
|
|
|
|
|
|
(Parent) |
|
(Issuer) |
|
Guarantors |
|
Subsidiaries |
|
Eliminations |
|
Consolidated |
|
|
Cost of sales |
|
$ |
|
|
|
$ |
|
|
|
$ |
1,823 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
1,823 |
|
Special charges |
|
|
|
|
|
|
2 |
|
|
|
394 |
|
|
|
|
|
|
|
|
|
|
|
396 |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
(229 |
) |
|
|
|
|
|
|
|
|
|
|
(229 |
) |
|
Total pretax special charges |
|
$ |
|
|
|
$ |
2 |
|
|
$ |
2,446 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
2,448 |
|
|
Special charges net of tax |
|
$ |
|
|
|
$ |
2 |
|
|
$ |
2,446 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
2,448 |
|
|
21
Libbey Inc.
Condensed Consolidating Statement of Operations
(dollars in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2008 |
|
|
Libbey |
|
Libbey |
|
|
|
|
|
Non- |
|
|
|
|
|
|
Inc. |
|
Glass |
|
Subsidiary |
|
Guarantor |
|
|
|
|
|
|
(Parent) |
|
(Issuer) |
|
Guarantors |
|
Subsidiaries |
|
Eliminations |
|
Consolidated |
|
Net sales |
|
$ |
|
|
|
$ |
89,987 |
|
|
$ |
26,583 |
|
|
$ |
84,055 |
|
|
$ |
(13,349 |
) |
|
$ |
187,276 |
|
Freight billed to customers |
|
|
|
|
|
|
172 |
|
|
|
303 |
|
|
|
193 |
|
|
|
|
|
|
|
668 |
|
|
Total revenues |
|
|
|
|
|
|
90,159 |
|
|
|
26,886 |
|
|
|
84,248 |
|
|
|
(13,349 |
) |
|
|
187,944 |
|
Cost of sales |
|
|
|
|
|
|
79,775 |
|
|
|
20,650 |
|
|
|
70,531 |
|
|
|
(13,349 |
) |
|
|
157,607 |
|
|
Gross profit |
|
|
|
|
|
|
10,384 |
|
|
|
6,236 |
|
|
|
13,717 |
|
|
|
|
|
|
|
30,337 |
|
Selling, general and administrative
expenses |
|
|
|
|
|
|
10,843 |
|
|
|
2,609 |
|
|
|
7,407 |
|
|
|
|
|
|
|
20,859 |
|
|
Income (loss) from operations |
|
|
|
|
|
|
(459 |
) |
|
|
3,627 |
|
|
|
6,310 |
|
|
|
|
|
|
|
9,478 |
|
Other income (expense) |
|
|
|
|
|
|
333 |
|
|
|
38 |
|
|
|
382 |
|
|
|
|
|
|
|
753 |
|
|
Earnings (loss) before interest and
income taxes |
|
|
|
|
|
|
(126 |
) |
|
|
3,665 |
|
|
|
6,692 |
|
|
|
|
|
|
|
10,231 |
|
Interest expense |
|
|
|
|
|
|
15,693 |
|
|
|
|
|
|
|
1,458 |
|
|
|
|
|
|
|
17,151 |
|
|
Earnings (loss) before income taxes |
|
|
|
|
|
|
(15,819 |
) |
|
|
3,665 |
|
|
|
5,234 |
|
|
|
|
|
|
|
(6,920 |
) |
Provision (benefit) for income taxes |
|
|
|
|
|
|
(320 |
) |
|
|
563 |
|
|
|
(3,686 |
) |
|
|
|
|
|
|
(3,443 |
) |
|
Net income (loss) |
|
|
|
|
|
|
(15,499 |
) |
|
|
3,102 |
|
|
|
8,920 |
|
|
|
|
|
|
|
(3,477 |
) |
Equity in net income (loss) of
subsidiaries |
|
|
(3,477 |
) |
|
|
12,022 |
|
|
|
|
|
|
|
|
|
|
|
(8,545 |
) |
|
|
|
|
|
Net income (loss) |
|
$ |
(3,477 |
) |
|
$ |
(3,477 |
) |
|
$ |
3,102 |
|
|
$ |
8,920 |
|
|
$ |
(8,545 |
) |
|
$ |
(3,477 |
) |
|
22
Libbey Inc.
Condensed Consolidating Balance Sheet
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2009 (unaudited) |
|
|
Libbey |
|
Libbey |
|
|
|
|
|
Non- |
|
|
|
|
|
|
Inc. |
|
Glass |
|
Subsidiary |
|
Guarantor |
|
|
|
|
|
|
(Parent) |
|
(Issuer) |
|
Guarantors |
|
Subsidiaries |
|
Eliminations |
|
Consolidated |
|
Cash and equivalents |
|
$ |
|
|
|
$ |
9,207 |
|
|
$ |
293 |
|
|
$ |
6,963 |
|
|
$ |
|
|
|
$ |
16,463 |
|
Accounts receivable net |
|
|
|
|
|
|
32,544 |
|
|
|
6,173 |
|
|
|
35,838 |
|
|
|
|
|
|
|
74,555 |
|
Inventories net |
|
|
|
|
|
|
50,158 |
|
|
|
24,500 |
|
|
|
94,768 |
|
|
|
|
|
|
|
169,426 |
|
Other current assets |
|
|
|
|
|
|
5,270 |
|
|
|
130 |
|
|
|
10,914 |
|
|
|
|
|
|
|
16,314 |
|
|
Total current assets |
|
|
|
|
|
|
97,179 |
|
|
|
31,096 |
|
|
|
148,483 |
|
|
|
|
|
|
|
276,758 |
|
Other non-current assets |
|
|
|
|
|
|
8,335 |
|
|
|
|
|
|
|
12,437 |
|
|
|
|
|
|
|
20,772 |
|
Investments in and advances to
subsidiaries |
|
|
(92,015 |
) |
|
|
411,133 |
|
|
|
265,186 |
|
|
|
135,654 |
|
|
|
(719,958 |
) |
|
|
|
|
Goodwill and purchased intangible assets
net |
|
|
|
|
|
|
26,274 |
|
|
|
15,778 |
|
|
|
148,194 |
|
|
|
|
|
|
|
190,246 |
|
|
Total other assets |
|
|
(92,015 |
) |
|
|
445,742 |
|
|
|
280,964 |
|
|
|
296,285 |
|
|
|
(719,958 |
) |
|
|
211,018 |
|
Property, plant and equipment net |
|
|
|
|
|
|
86,074 |
|
|
|
6,494 |
|
|
|
211,567 |
|
|
|
|
|
|
|
304,135 |
|
|
Total assets |
|
$ |
(92,015 |
) |
|
$ |
628,995 |
|
|
$ |
318,554 |
|
|
$ |
656,335 |
|
|
$ |
(719,958 |
) |
|
$ |
791,911 |
|
|
Accounts payable |
|
$ |
|
|
|
$ |
7,418 |
|
|
$ |
2,206 |
|
|
$ |
41,272 |
|
|
$ |
|
|
|
$ |
50,896 |
|
Accrued and other current liabilities |
|
|
|
|
|
|
64,515 |
|
|
|
13,650 |
|
|
|
30,616 |
|
|
|
|
|
|
|
108,781 |
|
Notes payable and long-term debt due
within one year |
|
|
|
|
|
|
215 |
|
|
|
|
|
|
|
12,490 |
|
|
|
|
|
|
|
12,705 |
|
|
Total current liabilities |
|
|
|
|
|
|
72,148 |
|
|
|
15,856 |
|
|
|
84,378 |
|
|
|
|
|
|
|
172,382 |
|
Long-term debt |
|
|
|
|
|
|
452,180 |
|
|
|
|
|
|
|
75,971 |
|
|
|
|
|
|
|
528,151 |
|
Other long-term liabilities |
|
|
|
|
|
|
142,758 |
|
|
|
13,917 |
|
|
|
26,718 |
|
|
|
|
|
|
|
183,393 |
|
|
Total liabilities |
|
|
|
|
|
|
667,086 |
|
|
|
29,773 |
|
|
|
187,067 |
|
|
|
|
|
|
|
883,926 |
|
Total shareholders equity |
|
|
(92,015 |
) |
|
|
(38,091 |
) |
|
|
288,781 |
|
|
|
469,268 |
|
|
|
(719,958 |
) |
|
|
(92,015 |
) |
|
Total liabilities and shareholders equity |
|
$ |
(92,015 |
) |
|
$ |
628,995 |
|
|
$ |
318,554 |
|
|
$ |
656,335 |
|
|
$ |
(719,958 |
) |
|
$ |
791,911 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008 |
|
|
Libbey |
|
Libbey |
|
|
|
|
|
Non- |
|
|
|
|
|
|
Inc. |
|
Glass |
|
Subsidiary |
|
Guarantor |
|
|
|
|
|
|
(Parent) |
|
(Issuer) |
|
Guarantors |
|
Subsidiaries |
|
Eliminations |
|
Consolidated |
|
Cash and equivalents |
|
$ |
|
|
|
$ |
6,453 |
|
|
$ |
413 |
|
|
$ |
6,438 |
|
|
$ |
|
|
|
$ |
13,304 |
|
Accounts receivable net |
|
|
|
|
|
|
32,789 |
|
|
|
6,076 |
|
|
|
37,207 |
|
|
|
|
|
|
|
76,072 |
|
Inventories net |
|
|
|
|
|
|
58,924 |
|
|
|
26,892 |
|
|
|
99,426 |
|
|
|
|
|
|
|
185,242 |
|
Other current assets |
|
|
|
|
|
|
4,731 |
|
|
|
316 |
|
|
|
12,120 |
|
|
|
|
|
|
|
17,167 |
|
|
Total current assets |
|
|
|
|
|
|
102,897 |
|
|
|
33,697 |
|
|
|
155,191 |
|
|
|
|
|
|
|
291,785 |
|
Other non-current assets |
|
|
|
|
|
|
9,462 |
|
|
|
43 |
|
|
|
12,560 |
|
|
|
|
|
|
|
22,065 |
|
Investments in and advances to
subsidiaries |
|
|
(57,889 |
) |
|
|
406,812 |
|
|
|
272,761 |
|
|
|
143,459 |
|
|
|
(765,143 |
) |
|
|
|
|
Goodwill and purchased intangible assets
net |
|
|
|
|
|
|
28,216 |
|
|
|
15,780 |
|
|
|
148,861 |
|
|
|
|
|
|
|
192,857 |
|
|
Total other assets |
|
|
(57,889 |
) |
|
|
444,490 |
|
|
|
288,584 |
|
|
|
304,880 |
|
|
|
(765,143 |
) |
|
|
214,922 |
|
Property, plant and equipment net |
|
|
|
|
|
|
88,628 |
|
|
|
7,697 |
|
|
|
218,522 |
|
|
|
|
|
|
|
314,847 |
|
|
Total assets |
|
$ |
(57,889 |
) |
|
$ |
636,015 |
|
|
$ |
329,978 |
|
|
$ |
678,593 |
|
|
$ |
(765,143 |
) |
|
$ |
821,554 |
|
|
Accounts payable |
|
$ |
|
|
|
$ |
9,370 |
|
|
$ |
2,794 |
|
|
$ |
42,264 |
|
|
$ |
|
|
|
$ |
54,428 |
|
Accrued and other current liabilities |
|
|
|
|
|
|
36,589 |
|
|
|
19,700 |
|
|
|
35,908 |
|
|
|
|
|
|
|
92,197 |
|
Notes payable and long-term debt due
within one year |
|
|
|
|
|
|
215 |
|
|
|
|
|
|
|
4,186 |
|
|
|
|
|
|
|
4,401 |
|
|
Total current liabilities |
|
|
|
|
|
|
46,174 |
|
|
|
22,494 |
|
|
|
82,358 |
|
|
|
|
|
|
|
151,026 |
|
Long-term debt |
|
|
|
|
|
|
451,772 |
|
|
|
|
|
|
|
94,084 |
|
|
|
|
|
|
|
545,856 |
|
Other long-term liabilities |
|
|
|
|
|
|
140,936 |
|
|
|
14,185 |
|
|
|
27,440 |
|
|
|
|
|
|
|
182,561 |
|
|
Total liabilities |
|
|
|
|
|
|
638,882 |
|
|
|
36,679 |
|
|
|
203,882 |
|
|
|
|
|
|
|
879,443 |
|
Total shareholders equity |
|
|
(57,889 |
) |
|
|
(2,867 |
) |
|
|
293,299 |
|
|
|
474,711 |
|
|
|
(765,143 |
) |
|
|
(57,889 |
) |
|
Total liabilities and shareholders equity |
|
$ |
(57,889 |
) |
|
$ |
636,015 |
|
|
$ |
329,978 |
|
|
$ |
678,593 |
|
|
$ |
(765,143 |
) |
|
$ |
821,554 |
|
|
23
Libbey Inc.
Condensed Consolidating Statement of Cash Flows
(dollars in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2009 |
|
|
Libbey |
|
Libbey |
|
|
|
|
|
Non- |
|
|
|
|
|
|
Inc. |
|
Glass |
|
Subsidiary |
|
Guarantor |
|
|
|
|
|
|
(Parent) |
|
(Issuer) |
|
Guarantors |
|
Subsidiaries |
|
Eliminations |
|
Consolidated |
|
Net income (loss) |
|
$ |
(27,893 |
) |
|
$ |
(27,893 |
) |
|
$ |
(1,482 |
) |
|
$ |
(5,008 |
) |
|
$ |
34,383 |
|
|
$ |
(27,893 |
) |
Depreciation and amortization |
|
|
|
|
|
|
3,928 |
|
|
|
1,343 |
|
|
|
6,457 |
|
|
|
|
|
|
|
11,728 |
|
Other operating activities |
|
|
27,893 |
|
|
|
28,019 |
|
|
|
179 |
|
|
|
8,841 |
|
|
|
(34,383 |
) |
|
|
30,549 |
|
|
Net cash provided by (used in)
operating activities |
|
|
|
|
|
|
4,054 |
|
|
|
40 |
|
|
|
10,290 |
|
|
|
|
|
|
|
14,384 |
|
Additions to property, plant &
equipment |
|
|
|
|
|
|
(1,364 |
) |
|
|
(160 |
) |
|
|
(3,416 |
) |
|
|
|
|
|
|
(4,940 |
) |
Other investing activities |
|
|
|
|
|
|
67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) investing activities |
|
|
|
|
|
|
(1,297 |
) |
|
|
(160 |
) |
|
|
(3,416 |
) |
|
|
|
|
|
|
(4,873 |
) |
Net borrowings |
|
|
|
|
|
|
(3 |
) |
|
|
|
|
|
|
(6,000 |
) |
|
|
|
|
|
|
(6,003 |
) |
Other financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in)
financing activities |
|
|
|
|
|
|
(3 |
) |
|
|
|
|
|
|
(6,000 |
) |
|
|
|
|
|
|
(6,003 |
) |
Exchange effect on cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(349 |
) |
|
|
|
|
|
|
(349 |
) |
|
Increase (decrease) in cash |
|
|
|
|
|
|
2,754 |
|
|
|
(120 |
) |
|
|
525 |
|
|
|
|
|
|
|
3,159 |
|
Cash at beginning of period |
|
|
|
|
|
|
6,453 |
|
|
|
413 |
|
|
|
6,438 |
|
|
|
|
|
|
|
13,304 |
|
|
Cash at end of period |
|
$ |
|
|
|
$ |
9,207 |
|
|
$ |
293 |
|
|
$ |
6,963 |
|
|
$ |
|
|
|
$ |
16,463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2008 |
|
|
Libbey |
|
Libbey |
|
|
|
|
|
Non- |
|
|
|
|
|
|
Inc. |
|
Glass |
|
Subsidiary |
|
Guarantor |
|
|
|
|
|
|
(Parent) |
|
(Issuer) |
|
Guarantors |
|
Subsidiaries |
|
Eliminations |
|
Consolidated |
|
Net income (loss) |
|
$ |
(3,477 |
) |
|
$ |
(3,477 |
) |
|
$ |
3,102 |
|
|
$ |
8,920 |
|
|
$ |
(8,545 |
) |
|
$ |
(3,477 |
) |
Depreciation and amortization |
|
|
|
|
|
|
3,882 |
|
|
|
756 |
|
|
|
6,658 |
|
|
|
|
|
|
|
11,296 |
|
Other operating activities |
|
|
3,477 |
|
|
|
(17,147 |
) |
|
|
(3,234 |
) |
|
|
(27,599 |
) |
|
|
8,545 |
|
|
|
(35,958 |
) |
|
Net cash provided by (used in)
operating activities |
|
|
|
|
|
|
(16,742 |
) |
|
|
624 |
|
|
|
(12,021 |
) |
|
|
|
|
|
|
(28,139 |
) |
Additions to property, plant &
equipment |
|
|
|
|
|
|
(3,320 |
) |
|
|
(115 |
) |
|
|
(5,917 |
) |
|
|
|
|
|
|
(9,352 |
) |
Other investing activities |
|
|
|
|
|
|
41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) investing activities |
|
|
|
|
|
|
(3,279 |
) |
|
|
(115 |
) |
|
|
(5,917 |
) |
|
|
|
|
|
|
(9,311 |
) |
Net borrowings |
|
|
|
|
|
|
(86 |
) |
|
|
|
|
|
|
8,681 |
|
|
|
|
|
|
|
8,595 |
|
Other financing activities |
|
|
|
|
|
|
(364 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(364 |
) |
|
Net cash provided by (used in)
financing activities |
|
|
|
|
|
|
(450 |
) |
|
|
|
|
|
|
8,681 |
|
|
|
|
|
|
|
8,231 |
|
Exchange effect on cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
282 |
|
|
|
|
|
|
|
282 |
|
|
Increase (decrease) in cash |
|
|
|
|
|
|
(20,471 |
) |
|
|
509 |
|
|
|
(8,975 |
) |
|
|
|
|
|
|
(28,937 |
) |
Cash at beginning of period |
|
|
|
|
|
|
20,834 |
|
|
|
532 |
|
|
|
15,173 |
|
|
|
|
|
|
|
36,539 |
|
|
Cash at end of period |
|
$ |
|
|
|
$ |
363 |
|
|
$ |
1,041 |
|
|
$ |
6,198 |
|
|
$ |
|
|
|
$ |
7,602 |
|
|
24
12. Segments
Our segments are described as follows:
|
|
North American Glassincludes sales of glass tableware from subsidiaries throughout the
United States, Canada and Mexico. |
|
|
|
North American Otherincludes sales of ceramic dinnerware; metal tableware, hollowware and
serveware; and plastic items from subsidiaries in the United States. |
|
|
|
Internationalincludes worldwide sales of glass tableware from subsidiaries outside the
United States, Canada and Mexico. |
Some operating segments were aggregated to arrive at the disclosed reportable segments. The
accounting policies of the segments are the same as those described in Note 2 of the Notes to
Condensed Consolidated Financial Statements. We do not have any customers who represent 10 percent
or more of total net sales. We evaluate the performance of our segments based upon net sales and
Earnings Before Interest and Taxes (EBIT). Intersegment sales are consummated at arms length and
are reflected in eliminations in the table below.
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, |
|
|
2009 |
|
2008 |
|
Net Sales: |
|
|
|
|
|
|
|
|
North American Glass |
|
$ |
108,743 |
|
|
$ |
127,477 |
|
North American Other |
|
|
21,377 |
|
|
|
26,583 |
|
International |
|
|
28,851 |
|
|
|
36,387 |
|
Eliminations |
|
|
(1,118 |
) |
|
|
(3,171 |
) |
|
Consolidated |
|
$ |
157,853 |
|
|
$ |
187,276 |
|
|
EBIT: |
|
|
|
|
|
|
|
|
North American Glass |
|
$ |
(8,625 |
) |
|
$ |
7,072 |
|
North American Other |
|
|
(1,120 |
) |
|
|
3,818 |
|
International |
|
|
(2,346 |
) |
|
|
(659 |
) |
|
Consolidated |
|
$ |
(12,091 |
) |
|
$ |
10,231 |
|
|
Special Charges: |
|
|
|
|
|
|
|
|
North American Glass |
|
$ |
2 |
|
|
$ |
|
|
North American Other |
|
|
2,446 |
|
|
|
|
|
International |
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
2,448 |
|
|
$ |
|
|
|
Depreciation & Amortization: |
|
|
|
|
|
|
|
|
North American Glass |
|
$ |
6,447 |
|
|
$ |
6,553 |
|
North American Other |
|
|
1,343 |
|
|
|
756 |
|
International |
|
|
3,938 |
|
|
|
3,987 |
|
|
Consolidated |
|
$ |
11,728 |
|
|
$ |
11,296 |
|
|
Capital Expenditures: |
|
|
|
|
|
|
|
|
North American Glass |
|
$ |
2,519 |
|
|
$ |
5,709 |
|
North American Other |
|
|
160 |
|
|
|
115 |
|
International |
|
|
2,261 |
|
|
|
3,528 |
|
|
Consolidated |
|
$ |
4,940 |
|
|
$ |
9,352 |
|
|
Reconciliation of EBIT to Net Loss: |
|
|
|
|
|
|
|
|
Segment EBIT |
|
$ |
(12,091 |
) |
|
$ |
10,231 |
|
Interest Expense |
|
|
(17,179 |
) |
|
|
(17,151 |
) |
Benefit from Income Taxes |
|
|
1,377 |
|
|
|
3,443 |
|
|
Net Loss |
|
$ |
(27,893 |
) |
|
$ |
(3,477 |
) |
|
25
13. Fair Value
We adopted SFAS 157 as of January 1, 2008, but we had not applied the statement to non-recurring,
nonfinancial assets and liabilities. We adopted SFAS 157 for nonrecurring, nonfinancial assets and
liabilities as of January 1, 2009. The adoption of SFAS 157 had no impact on our fair value
measurements. SFAS 157 defines fair value as the price that would be received to sell an asset or
paid to transfer a liability in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants at the measurement date. SFAS 157
establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into
three broad levels as follows:
|
|
|
Level 1 Quoted prices in active markets for identical assets or liabilities. |
|
|
|
|
Level 2 Inputs, other than the quoted prices in active markets, that are
observable either directly or indirectly. |
|
|
|
|
Level 3 Unobservable inputs based on our own assumptions. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at March 31, 2009 |
|
Fair Value at December 31, 2008 |
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
|
|
|
Commodity futures natural gas contracts |
|
$ |
|
|
|
$ |
(17,913 |
) |
|
$ |
|
|
|
$ |
(17,913 |
) |
|
$ |
|
|
|
$ |
(14,868 |
) |
|
$ |
|
|
|
$ |
(14,868 |
) |
Interest rate protection agreements |
|
|
|
|
|
|
(6,586 |
) |
|
|
|
|
|
|
(6,586 |
) |
|
|
|
|
|
|
(6,761 |
) |
|
|
|
|
|
|
(6,761 |
) |
|
|
|
Total derivative liability |
|
$ |
|
|
|
$ |
(24,499 |
) |
|
$ |
|
|
|
$ |
(24,499 |
) |
|
$ |
|
|
|
$ |
(21,629 |
) |
|
$ |
|
|
|
$ |
(21,629 |
) |
|
|
|
The fair values of our interest rate protection agreements are based on the market standard
methodology of netting the discounted expected future variable cash receipts and the discounted
future fixed cash payments. The variable cash receipts are based on an expectation of future
interest rates derived from observed market interest rate forward curves. The fair values of our
commodity futures natural gas contracts are determined using observable market inputs. Since these
inputs are observable in active markets over the terms that the instruments are held, the
derivatives are classified as Level 2 in the hierarchy. We also evaluate Company and counterparty
risk in determining fair values. The total derivative liability is recorded on the Condensed
Consolidated Balance Sheets with $20.1 million in derivative liability and $4.4 million in other
long-term liabilities as of March 31, 2009. As of December 31, 2008 $17.9 million was recorded in
derivative liability and $3.7 million in other long-term liabilities.
The commodity futures natural gas contracts and interest rate protection agreements are hedges of
either recorded assets or liabilities or anticipated transactions. Changes in values of the
underlying hedged assets and liabilities or anticipated transactions are not reflected in the above
table.
26
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should
be read in conjunction with our Condensed Consolidated Financial Statements and the related notes
thereto appearing elsewhere in this report and in our Annual Report filed with the Securities and
Exchange Commission. This discussion and analysis contains forward-looking statements that involve
risks, uncertainties and assumptions. Our actual results may differ from those anticipated in these
forward-looking statements as a result of many factors. These factors are discussed in Risk
Factors in Item 1A of section Part II Other Information.
Results of Operations First Quarter 2009 Compared with First Quarter 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, |
|
|
Variance |
|
(Dollars in thousands, except percentages and per-share amounts) |
|
2009 (2) |
|
|
2008 |
|
|
In dollars |
|
|
In percent |
|
|
Net sales |
|
$ |
157,853 |
|
|
$ |
187,276 |
|
|
$ |
(29,423 |
) |
|
|
(15.7 |
)% |
Gross profit |
|
$ |
10,716 |
|
|
$ |
30,337 |
|
|
$ |
(19,621 |
) |
|
|
(64.7 |
)% |
Gross profit margin |
|
|
6.8 |
% |
|
|
16.2 |
% |
|
|
|
|
|
|
|
|
(Loss) income from operations (IFO) |
|
$ |
(12,054 |
) |
|
$ |
9,478 |
|
|
$ |
(21,532 |
) |
|
|
(227.2 |
)% |
IFO margin |
|
|
(7.6 |
)% |
|
|
5.1 |
% |
|
|
|
|
|
|
|
|
(Loss) earnings before interest and income taxes
(EBIT)(1) |
|
$ |
(12,091 |
) |
|
$ |
10,231 |
|
|
$ |
(22,322 |
) |
|
|
(218.2 |
)% |
EBIT margin |
|
|
(7.7 |
)% |
|
|
5.5 |
% |
|
|
|
|
|
|
|
|
(Loss) earnings before interest, taxes, depreciation and
amortization (EBITDA)(1) |
|
$ |
(363 |
) |
|
$ |
21,527 |
|
|
$ |
(21,890 |
) |
|
|
(101.7 |
)% |
EBITDA margin |
|
|
(0.2 |
)% |
|
|
11.5 |
% |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(27,893 |
) |
|
$ |
(3,477 |
) |
|
$ |
(24,416 |
) |
|
|
(702.2 |
)% |
Net income margin |
|
|
(17.7 |
)% |
|
|
(1.9 |
)% |
|
|
|
|
|
|
|
|
Diluted net loss per share |
|
$ |
(1.89 |
) |
|
$ |
(0.24 |
) |
|
$ |
(1.65 |
) |
|
|
(687.5 |
)% |
|
|
|
(1) |
|
We believe that EBIT and EBITDA, non-GAAP financial measures, are useful metrics for
evaluating our financial performance, as they are measures that we use internally to assess
our performance. See Table 1 for a reconciliation of net loss to EBIT and EBITDA and a further
discussion as to the reasons we believe these non-GAAP financial measures are useful. |
|
(2) |
|
Includes pre-tax special charges of $2.4 million related to the closing of our Syracuse China
manufacturing facility in the North American Other segment. (See note 5 to the Condensed
Consolidated Financial Statements). |
Net Sales
For the quarter ended March 31, 2009, net sales decreased 15.7 percent to $157.9 million from
record first quarter sales of $187.3 million in the year-ago quarter. North American Glass net
sales decreased 14.7 percent, due primarily to a decrease of 29.2 percent in shipments to Crisa
customers and a decline in sales to U.S. and Canadian customers of 7.0 percent in retail glassware
and 4.3 percent in foodservice glassware. Of this 4.3 percent reduction in Foodservice sales,
reduced shipments to glassware customers in the United States represented less than 1 percent.
Approximately 14.0 percent, or nearly half of the over 29.2 percent reduction at Crisa was related
to the devaluation of the Mexican peso. These decreases were partially offset by higher shipments
to U.S. business-to-business customers, which were up over 2 percent. North American Other net
sales decreased 19.6 percent due to a decline in shipments of World Tableware, Syracuse China and
Traex products. International net sales decreased 20.7 percent compared to the year-ago quarter.
Unfavorable currency impact caused 9.6 percent of the decline due primarily to the declining
strength of the euro when compared to the U.S. dollar. Excluding the currency impact,
International sales decreased 11.1 percent, as sales to Royal Leerdam and Crisal glassware
customers declined, partially offset by a 5 percent increase in sales to Libbey China customers
when compared to the prior year period.
Gross Profit
For the quarter ended March 31, 2009, gross profit decreased by $19.6 million, or 64.7 percent, to
$10.7 million, compared to $30.3
million in the year-ago quarter. Gross profit as a percentage of net sales decreased to 6.8
percent, compared to 16.2 percent in the year-ago quarter. The unfavorable mix and lower level of
net sales, particularly in the U.S. resulted in $11.0 million of the decline in
27
gross margin, and
lower production activity offset by reduced manufacturing costs contributed another $10.9 million
to the decrease as a significant portion of these expenses are fixed, and could not be reduced to
the same extent as net sales. Additional depreciation expense of $0.7 million was recorded to
reflect the shorter remaining useful life of the assets and an additional $1.1 million of
manufacturing cost was recorded for an inventory write-down related to the closure of our Syracuse
China facility. See note 5 for more discussion about this special charge. These unfavorable items
were offset by a reduction of $3.7 million in our distribution costs.
(Loss) Income From Operations
Income from operations for the quarter ended March 31, 2009 decreased $21.5 million, to a loss of
$12.1 million, compared to income of $9.5 million in the year-ago quarter. Income from operations
as a percentage of net sales decreased to (7.6) percent in the first quarter 2009, compared to 5.1
percent in the year-ago quarter. The decline in income from operations is a result of lower gross
profit and gross profit margin (discussed above), combined with higher selling, general and
administrative expenses and a $0.4 million special charge related to the Syracuse China shutdown.
The $1.5 million increase in selling, general and administrative expenses was caused by a $2.5
million pension settlement charge arising from lump sum payments to retirees during the first
quarter of 2009 and the 2008 reversal of $1.3 million related to favorable rulings in connection
with an outstanding dispute regarding a warehouse lease in Mexico. These increases were offset by
a decrease in other labor and benefits expenses of $1.7 million and legal and professional fees of
$0.6 million.
(Loss) Earnings Before Interest and Income Taxes (EBIT)
Earnings before Interest and Income Taxes (EBIT) decreased by $22.3 million, from earnings of $10.2
million in 2008, compared to a loss of $(12.1) million in 2009. EBIT as a percentage of net sales
decreased to (7.7) percent in the first quarter 2009, compared to 5.5 percent in the year-ago
quarter. Key contributors to the decrease in EBIT compared to the year-ago quarter are the same as
those discussed above under (Loss) Income From Operations, in addition to an unfavorable swing in
foreign currency translation losses versus the prior year quarter of approximately $0.7 million.
(Loss) Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA)
EBITDA decreased by 101.7 percent to a loss of $(0.4) million in the first quarter of 2009 from
income of $21.5 million in the year-ago quarter. As a percentage of net sales, EBITDA was (0.2)
percent for the first quarter 2009, compared to 11.5 percent in the year-ago quarter. The key
contributors to the decrease in EBITDA were those factors discussed above under (Loss) Earnings
before Interest and Income Taxes (EBIT). Depreciation and amortization expenses increased $0.4
million. This increase is principally the result of the $0.7 million of additional depreciation
expense mentioned above, due to the decreased remaining useful life of certain assets at our
Syracuse China operations.
Net Loss and Diluted Net Loss Per Share
We recorded a net loss of $(27.9) million, or $(1.89) per diluted share, in the first quarter 2009,
compared to a net loss of $(3.5) million, or $(0.24) per diluted share, in the year-ago quarter.
Net loss as a percentage of net sales was (17.7) percent in the first quarter 2009, compared to
(1.9) percent in the year-ago quarter. In addition, the effective tax rate was 4.7 percent for the
quarter compared to 49.8 percent in the year-ago quarter, providing a smaller relative tax benefit
from the loss. The Companys effective tax rate changed from the year-ago quarter primarily as a
result of valuation allowances in the United States, the Netherlands, and Portugal. Further,
changes in the mix of earnings in countries with differing statutory tax rates, changes in accruals
related to uncertain tax positions, tax planning structures and changes in tax laws have also
impacted the effective tax rate.
28
Segment Results of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
March 31, |
|
Variance |
(Dollars in thousands) |
|
2009 |
|
2008 |
|
In dollars |
|
In percent |
|
Net Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North American Glass |
|
$ |
108,743 |
|
|
$ |
127,477 |
|
|
$ |
(18,734 |
) |
|
|
(14.7 |
)% |
North American Other |
|
|
21,377 |
|
|
|
26,583 |
|
|
|
(5,206 |
) |
|
|
(19.6 |
)% |
International |
|
|
28,851 |
|
|
|
36,387 |
|
|
|
(7,536 |
) |
|
|
(20.7 |
)% |
Eliminations |
|
|
(1,118 |
) |
|
|
(3,171 |
) |
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
157,853 |
|
|
$ |
187,276 |
|
|
$ |
(29,423 |
) |
|
|
(15.7 |
)% |
|
EBIT: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North American Glass |
|
$ |
(8,625 |
) |
|
$ |
7,072 |
|
|
$ |
(15,697 |
) |
|
|
(222.0 |
)% |
North American Other |
|
|
(1,120 |
) |
|
|
3,818 |
|
|
|
(4,938 |
) |
|
|
(129.3 |
)% |
International |
|
|
(2,346 |
) |
|
|
(659 |
) |
|
|
(1,687 |
) |
|
|
(256.0 |
)% |
|
Consolidated |
|
$ |
(12,091 |
) |
|
$ |
10,231 |
|
|
$ |
(22,322 |
) |
|
|
(218.2 |
)% |
|
EBIT Margin: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North American Glass |
|
|
(7.9 |
)% |
|
|
5.5 |
% |
|
|
|
|
|
|
|
|
North American Other |
|
|
(5.2 |
)% |
|
|
14.4 |
% |
|
|
|
|
|
|
|
|
International |
|
|
(8.1 |
)% |
|
|
(1.8 |
)% |
|
|
|
|
|
|
|
|
Consolidated |
|
|
(7.7 |
)% |
|
|
5.5 |
% |
|
|
|
|
|
|
|
|
Special charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North American Glass |
|
$ |
2 |
|
|
$ |
|
|
|
$ |
2 |
|
|
|
100.0 |
% |
North American Other |
|
|
2,446 |
|
|
|
|
|
|
|
2,446 |
|
|
|
100.0 |
% |
International |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100.0 |
% |
|
Consolidated |
|
$ |
2,448 |
|
|
$ |
|
|
|
$ |
2,448 |
|
|
|
100.0 |
% |
|
Segment Results of Operations First Quarter 2009 Compared to First Quarter 2008
North American Glass
For the quarter ended March 31, 2009, net sales decreased 14.7 percent to $108.7 million from
$127.5 million in the year-ago quarter. Of the total decrease in net sales, approximately 9.0
percent was attributable to decreased shipments to Crisas customers, 3.2 percent was attributable
to decreased shipments to U.S. and Canadian foodservice glassware customers and 1.7 percent was
attributable to decreased shipments to U.S. and Canadian retail glassware customers. Of the 9.0
percent attributable to decreased shipments of Crisa product, 5.5 percent is related to an
unfavorable currency impact.
EBIT decreased to $(8.6) million for the first quarter 2009, compared to $7.1 million for the
year-ago quarter. EBIT as a percentage of net sales decreased to (7.9) percent in the first
quarter 2009, compared to 5.5 percent in the year-ago quarter. The key factors in the decline in
EBIT compared to the year-ago quarter were $10.4 million due to the decreased production activity
offset by lower manufacturing costs and $6.1 million due to an unfavorable sales mix. In addition,
a $2.4 million increase in selling, general and administrative expense was caused primarily by a
$2.5 million pension settlement charge arising from lump sum payments to retirees during the first
quarter of 2009 and a one-time reversal of $1.3 million in the first quarter of 2008 related to
favorable rulings in connection with an outstanding dispute regarding a warehouse lease in Mexico.
These increases were partially offset by decreases of $1.0 million in labor and benefits and $0.4
million in legal and professional fees. The factors contributing to the decrease in EBIT were
partially offset by decreases of $3.1 million in distribution costs.
North American Other
For the quarter ended March 31, 2009, net sales declined 19.6 percent to $21.4 million from $26.6
million in the year-ago quarter. Components of the total decrease in net sales were declines of
approximately 10.3 percent in shipments of World Tableware products,
approximately 4.4 percent in
shipments of Syracuse China products and approximately 3.9 percent in shipments of Traex products.
29
EBIT declined by $4.9 million for the first quarter of 2009, compared to the year-ago quarter. EBIT
as a percentage of net sales decreased to (5.2) percent in the first quarter of 2009, compared to
14.4 percent in the year-ago quarter. The key contributors to the decreased EBIT were decreased
sales, which caused an unfavorable $4.3 million impact. Production costs included a $0.7 million
special charge due to additional depreciation expenses recorded to reflect the shorter remaining
useful life of the assets at our Syracuse China facility and a $1.1 million write-down of raw
materials and work in process inventory also related to the shut down of our Syracuse China
facility. These were offset by a decrease in other production costs and purchased product in the
segment. Decreases of $0.4 million each in distribution costs and SG&A expenses were offset by
special charges of $0.4 million primarily from legal and consulting fees related to the closure of
Syracuse China and other expenses of $0.3 million as a result of ineffectiveness of natural gas
hedges.
International
For the quarter ended March 31, 2009, net sales decreased 20.7 percent to $28.9 million from $36.4
million in the year-ago quarter. Of the total decrease in net sales, 10.7 percent was related to
the currency impact of a weaker euro; and the majority of the remaining decrease in net sales was
related to decreased shipments to Royal Leerdam and Crisal customers, while sales to customers of
Libbey China were essentially flat.
EBIT declined by $1.7 million for the first quarter of 2009, to $(2.3) million compared to $(0.7)
million in the year-ago quarter. EBIT as a percentage of net sales decreased to (8.1) percent in
the first quarter 2009, compared to (1.8) percent in the year-ago quarter. Decreased net sales and
production activity offset by lower manufacturing costs were responsible for $0.6 million and $1.6
million of the EBIT decline, respectively, and other income (expense) contributed another $0.5
million to the decline as $0.7 million of translation losses were partially offset by other income
of $0.2 million. These factors were offset by a $0.7 million reduction in SG&A due mainly to labor
and benefits savings and a $0.2 million reduction in distribution costs.
Capital Resources and Liquidity
Balance Sheet and Cash Flows
Cash and Equivalents
At March 31, 2009, our cash balance was $16.5 million, an increase of $3.2 million from $13.3
million at December 31, 2008. The increase was primarily due to an increase in our free cash flow
offset by payments on our ABL facility.
Working Capital
The following table presents our working capital components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands, except percentages |
|
|
|
|
|
|
|
|
|
Variance |
and DSO, DIO, DPO and DWC) |
|
March 31, 2009 |
|
December 31, 2008 |
|
In dollars |
|
In percent |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable net |
|
$ |
74,555 |
|
|
$ |
76,072 |
|
|
$ |
(1,517 |
) |
|
|
(2.0 |
)% |
DSO (1) |
|
|
34.9 |
|
|
|
34.3 |
|
|
|
|
|
|
|
|
|
Inventories net |
|
$ |
169,426 |
|
|
$ |
185,242 |
|
|
$ |
(15,816 |
) |
|
|
(8.5 |
)% |
DIO (2) |
|
|
79.2 |
|
|
|
83.5 |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
50,896 |
|
|
$ |
54,428 |
|
|
$ |
(3,532 |
) |
|
|
(6.5 |
)% |
DPO (3) |
|
|
23.8 |
|
|
|
24.5 |
|
|
|
|
|
|
|
|
|
Working capital (4) |
|
$ |
193,085 |
|
|
$ |
206,886 |
|
|
$ |
(13,801 |
) |
|
|
(6.7 |
)% |
DWC (5) |
|
|
90.3 |
|
|
|
93.3 |
|
|
|
|
|
|
|
|
|
Percentage of net sales |
|
|
24.7 |
% |
|
|
25.5 |
% |
|
|
|
|
|
|
|
|
30
DSO, DIO, DPO and DWC are calculated using net sales as the denominator and are based on a
365-day calendar year.
|
|
|
(1) |
|
Days sales outstanding (DSO) measures the number of days it takes to turn receivables into
cash. |
|
(2) |
|
Days inventory outstanding (DIO) measures the number of days it takes to turn inventory into
cash. |
|
(3) |
|
Days payable outstanding (DPO) measures the number of days it takes to pay the balances of
our accounts payable. |
|
(4) |
|
Working capital is defined as net accounts receivable plus net inventories less accounts
payable. See Table 3 for the calculation of this non-GAAP financial measure and for further
discussion as to the reasons we believe this non-GAAP financial measure is useful. |
|
(5) |
|
Days working capital (DWC) measures the number of days it takes to turn our working capital
into cash. |
Working capital (as defined above) was $193.1 million at March 31, 2009, a decrease of $13.8
million from December 31, 2008. This decrease is due primarily to lower inventories and reduced
receivables, which resulted from our continued focus on our cash management efforts to increase
cash flow through reductions in working capital, and lower production activity. Working capital as
a percentage of net sales decreased from 25.5 percent from December 31, 2008 to 24.7 percent in the
first quarter of 2009.
31
Borrowings
The following table presents our total borrowings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
(Dollars in thousands) |
|
Interest Rate |
|
Maturity Date |
|
2009 |
|
2008 |
|
Borrowings under ABL facility |
|
floating |
|
December 16, 2010 |
|
$ |
26,416 |
|
|
$ |
34,538 |
|
Senior notes |
|
floating (1) |
|
June 1, 2011 |
|
|
306,000 |
|
|
|
306,000 |
|
PIK notes (2) |
|
|
16.00 |
% |
|
December 1, 2011 |
|
|
148,946 |
|
|
|
148,946 |
|
Promissory note |
|
|
6.00 |
% |
|
April, 2009 to September, 2016 |
|
|
1,624 |
|
|
|
1,666 |
|
Notes payable |
|
floating |
|
April, 2009 |
|
|
2,810 |
|
|
|
3,284 |
|
RMB loan contract |
|
floating |
|
July, 2012 to January, 2014 |
|
|
36,625 |
|
|
|
36,675 |
|
RMB working capital loan |
|
floating |
|
March, 2010 |
|
|
7,325 |
|
|
|
7,335 |
|
Obligations under capital leases |
|
floating |
|
April, 2009 to May, 2009 |
|
|
118 |
|
|
|
302 |
|
BES Euro line |
|
floating |
|
January, 2010 to January, 2014 |
|
|
14,529 |
|
|
|
15,507 |
|
Other debt |
|
floating |
|
September, 2009 |
|
|
639 |
|
|
|
630 |
|
|
Total borrowings |
|
|
|
|
|
|
|
|
|
|
545,032 |
|
|
|
554,883 |
|
Less unamortized discounts and warrants |
|
|
|
|
|
|
|
|
|
|
4,176 |
|
|
|
4,626 |
|
|
Total borrowings net (3) |
|
|
|
|
|
|
|
|
|
$ |
540,856 |
|
|
$ |
550,257 |
|
|
|
|
|
(1) |
|
See Derivatives below and note 9 to the Condensed Consolidated Financial Statements. |
|
(2) |
|
Additional PIK notes were issued each June 1 and December 1, commencing on December 1, 2006,
to pay semi-annual interest. During the first three years, interest is payable by the
issuance of additional PIK notes. |
|
(3) |
|
The total borrowings net include notes payable, long-term debt due within one year and
long-term debt as stated in our Condensed Consolidated Balance Sheets. |
We had total borrowings of $545.0 million at March 31, 2009, compared to total borrowings of $554.9
million at December 31, 2008. The $9.9 million decrease in borrowings was primarily the result of
the repayment of borrowings under our ABL facility and the currency exchange impact from the U.S.
dollar strengthening against the euro during the first quarter of 2009.
Of our total indebtedness, $194.5 million, approximately 35.7 percent, is subject to fluctuating
interest rates at March 31, 2009. A change of one percentage point in such rates would result in a
change in interest expense of approximately $1.9 million on an annual basis.
Included in interest expense is the amortization of discounts, warrants and financing fees. These
items amounted to $1.3 million and $1.3 million for the three months ended March 31, 2009 and 2008,
respectively.
Cash Flow
The following table presents key drivers to our free cash flow for the third quarter.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, |
|
Variance |
(Dollars in thousands, except percentages) |
|
2009 |
|
2008 |
|
In dollars |
|
In percent |
|
Net cash provided by (used in) operating activities |
|
$ |
14,384 |
|
|
$ |
(28,139 |
) |
|
$ |
42,523 |
|
|
|
151.1 |
% |
Capital expenditures |
|
|
(4,940 |
) |
|
|
(9,352 |
) |
|
|
4,412 |
|
|
|
47.2 |
% |
Proceeds from asset sales and other |
|
|
67 |
|
|
|
41 |
|
|
|
26 |
|
|
|
63.4 |
% |
|
Free cash flow (1) |
|
$ |
9,511 |
|
|
$ |
(37,450 |
) |
|
$ |
46,961 |
|
|
|
125.4 |
% |
|
|
|
|
(1) |
|
We believe that Free Cash Flow [net cash provided by (used in) operating activities, less
capital expenditures, plus proceeds from assets sales and other] is a useful metric for
evaluating our financial performance, as it is a measure we use internally to assess
performance. See Table 2 for a reconciliation of net cash provided by (used in) operating
activities to free cash flow and a further discussion as to the reasons we believe this non-GAAP
financial measure is useful. |
32
Our net cash provided by operating activities was $14.4 million in the first quarter of 2009,
compared to net cash used by operating activities of $28.1 million in the year-ago quarter, or an
improvement of $42.5 million. The major factors impacting cash flow from operations were a $30.8
million improvement in working capital performance compared to the prior year quarter and the final
$19.6 million payment to Vitro made in 2008 related to the 2006 Crisa acquisition. These
improvements were offset by cash required to fund our losses in the current period.
Our net cash used in investing activities decreased to $4.9 million in the first quarter of 2009,
compared to $9.3 million in the year-ago period, primarily as a result of decreased capital
expenditures in our North American Glass and International operations.
Net cash used in financing activities was $6.0 million in the first quarter of 2009, compared to
net cash provided by financing activities of $8.2 million in the year-ago quarter, or a swing of
$14.2 million. During the first quarter of 2008, we utilized $9.1 million more of our capacity on
the ABL Facility to fund our operating needs, while we made $5.9 million of repayments on that
facility in the first quarter of 2009.
Our free cash flow was $9.5 million during the first quarter 2009, compared to a use of cash of
$37.5 million in the year-ago quarter, an improvement of $47.0 million. The primary contributor to
this change was the improvement in cash flow from operations and reduced capital expenditures in
the current period.
Derivatives
We have Interest Rate Protection Agreements (Rate Agreements) with respect to $200.0 million of
debt as a means to manage our exposure to fluctuating interest rates. The Rate Agreements
effectively convert this portion of our long-term borrowings from variable rate debt to fixed-rate
debt, thus reducing the impact of interest rate changes on future income. The fixed interest rate
for our borrowings related to the Rate Agreements at March 31, 2009, excluding applicable fees, is
5.24 percent per year and the total interest rate, including applicable fees, is 12.24 percent per
year. The average maturity of these Rate Agreements is 0.7 years at March 31, 2009. Total remaining
Senior Notes not covered by the Rate Agreements have fluctuating interest rates with a weighted
average rate of 9.57 percent per year at March 31, 2009. If the counterparties to these Rate
Agreements were to fail to perform, these Rate Agreements would no longer protect us from interest
rate fluctuations. However, we do not anticipate nonperformance by the counterparties. All
counterparties credit ratings were rated A+ or better as of March 31, 2009, by Standard and
Poors.
The fair market value for the Rate Agreements at March 31, 2009, was a $(6.6) million liability.
At December 31, 2008, the fair market value of these Rate Agreements was a $(6.8) million
liability. The fair value of the Rate Agreements is based on the market standard methodology of
netting the discounted expected future variable cash receipts and the discounted future fixed cash
payments. The variable cash receipts are based on an expectation of future interest rates derived
from observed market interest rate forward curves. We do not expect to cancel these agreements and
expect them to expire as originally contracted.
We also use commodity futures contracts related to forecasted future North American natural gas
requirements. The objective of these futures contracts is to reduce the effects of fluctuations and
adverse price movements in the underlying commodity. We consider our forecasted natural gas
requirements in determining the quantity of natural gas to hedge. We combine the forecasts with
historical observations to establish the percentage of forecast eligible to be hedged, typically
ranging from 40 percent to 70 percent of our anticipated requirements up to eighteen months in the
future. The fair values of these instruments is determined from market quotes. At March 31, 2009,
we had commodity futures contracts for 4,580,000 million British Thermal Units (BTUs) of natural
gas with a fair market value of a $(17.9) million liability. We have hedged approximately 20
percent of forecasted transactions through December 2010. At December 31, 2008, we had commodity
futures contracts for 5,280,000 million BTUs of natural gas with a fair market value of a $(14.9)
million liability. The counterparties credit ratings for these derivatives were rated AA- or
better as of March 31, 2009, by Standard & Poors.
Capital Resources and Liquidity
Historically, cash flows generated from operations and our borrowing capacity under our ABL
facility have allowed us to meet our cash requirements, including capital expenditures and working
capital needs. Remaining unused availability on the ABL Facility was $49.0 million at March 31,
2009 and $44.6 million at December 31, 2008. We were impacted by recessionary pressures in 2008,
33
especially during the fourth quarter of the year and the current quarter of 2009, and we anticipate
that the global economic recession will continue throughout 2009 and perhaps beyond. In addition,
interest on our PIK Notes will be payable in cash beginning December 1, 2009. We began taking a
number of steps to enhance our liquidity in 2008, have continued with further steps in 2009
(including those announced in February, 2009), and have begun to see the benefits of these measures
in our positive free cash flow for the first quarter. However, if cash generated from operations
is insufficient to satisfy our liquidity requirements, we may seek to sell additional equity or
arrange additional debt financing. Global financial markets and economic conditions have been, and
continue to be, disrupted and volatile. The credit and capital markets have become distressed.
These issues, along with significant write-offs in the financial services sector, the re-pricing of
credit risk and the current weak economic conditions, have made it difficult, and will likely
continue to make it difficult, to obtain funding in future periods. If cash from operations and
cash available from our ABL Facility are not sufficient to meet our needs, we cannot assure you
that we will be able to obtain additional financing in sufficient amounts and/or on acceptable
terms in the near future or when our debt obligations reach maturity. Our ABL Facility expires in
December 2010, the Senior Notes expire in June 2011, and the PIK notes expire in December 2011.
Furthermore, because of the current price of our stock, we cannot anticipate that it would be
desirable to sell additional equity, even if we were able to do so. However, based upon our
operating plans and current forecast expectations (including expectations that the global economy
will not deteriorate further) we anticipate that we will generate positive cash flow from
operations and, if necessary, have sufficient cash availability from our ABL Facility to meet our
liquidity needs for at least one year.
34
Reconciliation of Non-GAAP Financial Measures
We sometimes refer to data derived from condensed consolidated financial information but not
required by GAAP to be presented in financial statements. Certain of these data are considered
non-GAAP financial measures under Securities and Exchange Commission (SEC) Regulation G. We
believe that non-GAAP data provide investors with a more complete understanding of underlying
results in our core business and trends. In addition, we use non-GAAP data internally to assess
performance. Although we believe that the non-GAAP financial measures presented enhance investors
understanding of our business and performance, these non-GAAP measures should not be considered an
alternative to GAAP.
Table 1
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Reconciliation of net loss to EBIT and EBITDA |
|
March 31, |
|
(Dollars in thousands) |
|
2009 |
|
|
2008 |
|
|
Net loss |
|
$ |
(27,893 |
) |
|
$ |
(3,477 |
) |
Add: Interest expense |
|
|
17,179 |
|
|
|
17,151 |
|
Add: Benefit from income taxes |
|
|
(1,377 |
) |
|
|
(3,443 |
) |
|
(Loss) earnings before interest and income taxes (EBIT) |
|
|
(12,091 |
) |
|
|
10,231 |
|
Add: Depreciation and amortization |
|
|
11,728 |
|
|
|
11,296 |
|
|
(Loss) earnings before interest, taxes, deprecation and
amortization (EBITDA) |
|
$ |
(363 |
) |
|
$ |
21,527 |
|
|
We define EBIT as net income before interest expense and income taxes. The most directly comparable
U.S. GAAP financial measure is earnings before interest and income taxes.
We believe that EBIT is an important supplemental measure for investors in evaluating operating
performance in that it provides insight into company profitability. Libbeys senior management uses
this measure internally to measure profitability. EBIT also allows for a measure of comparability
to other companies with different capital and legal structures, which accordingly may be subject to
different interest rates and effective tax rates.
The non-GAAP measure of EBIT does have certain limitations. It does not include interest expense,
which is a necessary and ongoing part of our cost structure resulting from debt incurred to expand
operations. Because this is a material and recurring item, any measure that excludes it has a
material limitation. EBIT may not be comparable to similarly titled measures reported by other
companies.
We define EBITDA as net income before interest expense, income taxes, depreciation and
amortization. The most directly comparable U.S. GAAP financial measure is earnings before interest
and income taxes.
We believe that EBITDA is an important supplemental measure for investors in evaluating operating
performance in that it provides insight into company profitability and cash flow. Libbeys senior
management uses this measure internally to measure profitability and to set performance targets for
managers. It also has been used regularly as one of the means of publicly providing guidance on
possible future results. EBITDA also allows for a measure of comparability to other companies with
different capital and legal structures, which accordingly may be subject to different interest
rates and effective tax rates, and to companies that may incur different depreciation and
amortization expenses or impairment charges.
The non-GAAP measure of EBITDA does have certain limitations. It does not include interest expense,
which is a necessary and ongoing part of our cost structure resulting from debt incurred to expand
operations. EBITDA also excludes depreciation and amortization expenses. Because these are material
and recurring items, any measure that excludes them has a material limitation. EBITDA may not be
comparable to similarly titled measures reported by other companies.
35
Table 2
|
|
|
|
|
|
|
|
|
Reconciliation of net cash provided by (used in) operating activities to free cash flow |
|
Three months ended March 31, |
(Dollars in thousands) |
|
2009 |
|
2008 |
|
Net cash provided by (used in) operating activities |
|
$ |
14,384 |
|
|
$ |
(28,139 |
) |
Capital expenditures |
|
|
(4,940 |
) |
|
|
(9,352 |
) |
Proceeds from asset sales and other |
|
|
67 |
|
|
|
41 |
|
|
Free cash flow |
|
$ |
9,511 |
|
|
$ |
(37,450 |
) |
|
We define free cash flow as net cash provided by (used in) operating activities less capital
expenditures adjusted for proceeds from asset sales and other. The most directly comparable U.S.
GAAP financial measure is net cash provided by (used in) operating activities.
We believe that free cash flow is important supplemental information for investors in evaluating
cash flow performance in that it provides insight into the cash flow available to fund such things
as discretionary debt service, acquisitions and other strategic investment opportunities. It is a
measure of performance we use to internally evaluate the overall performance of the business.
Free cash flow is used in conjunction with and in addition to results presented in accordance with
U.S. GAAP. Free cash flow is neither intended to represent nor be an alternative to the measure of
net cash provided by (used in) operating activities recorded under U.S. GAAP. Free cash flow may
not be comparable to similarly titled measures reported by other companies.
Table 3
|
|
|
|
|
|
|
|
|
Reconciliation of working capital |
|
March 31, |
|
December 31, |
(Dollars in thousands) |
|
2009 |
|
2008 |
|
Accounts receivable (net) |
|
$ |
74,555 |
|
|
$ |
76,072 |
|
Plus: Inventories (net) |
|
|
169,426 |
|
|
|
185,242 |
|
Less: Accounts payable |
|
|
50,896 |
|
|
|
54,428 |
|
|
Working capital |
|
$ |
193,085 |
|
|
$ |
206,886 |
|
|
We define working capital as net accounts receivable plus net inventories less accounts payable.
We believe that working capital is important supplemental information for investors in evaluating
liquidity in that it provides insight into the availability of net current resources to fund our
ongoing operations. Working capital is a measure used by management in internal evaluations of cash
availability and operational performance.
Working capital is used in conjunction with and in addition to results presented in accordance with
U.S. GAAP. Working capital is neither intended to represent nor be an alternative to any measure of
liquidity and operational performance recorded under U.S. GAAP. Working capital may not be
comparable to similarly titled measures reported by other companies.
Item 3. Qualitative and Quantitative Disclosures about Market Risk
Currency
We are exposed to market risks due to changes in currency values, although the majority of our
revenues and expenses are denominated in U.S. dollars. The currency market risks include
devaluations and other major currency fluctuations relative to the U.S. dollar, euro, RMB or
Mexican peso that could reduce the cost competitiveness of our products compared to foreign
competition.
Interest Rates
We are exposed to market risks associated with changes in interest rates on our floating debt and
have entered into Interest Rate
Protection Agreements (Rate Agreements) with respect to $200.0 million of debt as a means to manage
our exposure to fluctuating interest rates. The Rate Agreements effectively convert this portion of
our long-term borrowings from variable rate debt to fixed-rate
36
debt, thus reducing the impact of interest rate changes on future income. We had $194.5
million of debt subject to fluctuating interest rates at March 31, 2009. A change of one percentage
point in such rates would result in a change in interest expense of approximately $1.9 million on
an annual basis. If the counterparties to these Rate Agreements were to fail to perform, we would
no longer be protected from interest rate fluctuations by these Rate Agreements. However, we do not
anticipate nonperformance by the counterparties. All interest rate swap counterparties were rated
A+ or better as of March 31, 2009, by Standard and Poors.
Natural Gas
We are also exposed to market risks associated with changes in the price of natural gas. We use
commodity futures contracts related to forecasted future North American natural gas requirements of
our manufacturing operations. The objective of these futures contracts is to limit the fluctuations
in prices paid and potential losses in earnings or cash flows from adverse price movements in the
underlying natural gas commodity. We consider the forecasted natural gas requirements of our
manufacturing operations in determining the quantity of natural gas to hedge. We combine the
forecasts with historical observations to establish the percentage of forecast eligible to be
hedged, typically ranging from 40 percent to 70 percent of our anticipated requirements up to
eighteen months in the future. For our natural gas requirements that are not hedged, we are subject
to changes in the price of natural gas, which affect our earnings. If the counterparties to these
futures contracts were to fail to perform, we would no longer be protected from natural gas
fluctuations by the futures contracts. However, we do not anticipate nonperformance by these
counterparties. All counterparties were rated AA- or better by Standard and Poors as of March 31,
2009.
Retirement Plans
We are exposed to market risks associated with changes in the various capital markets. Changes in
long-term interest rates affect the discount rate that is used to measure our benefit obligations
and related expense. Changes in the equity and debt securities markets affect the performance of
our pension plans asset performance and related pension expense. Sensitivity to these key market
risk factors is as follows:
|
|
|
A change of 1 percent in the discount rate would change our total annual expense by
approximately $1.9 million. |
|
|
|
|
A change of 1 percent in the expected long-term rate of return on plan assets would
change annual pension expense by approximately $2.2 million. |
Item 4. Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information
required to be disclosed in our Securities Exchange Act of 1934 (the Exchange Act) reports are
recorded, processed, summarized and reported within the time periods specified in the Securities
and Exchange Commissions rules and forms and that such information is accumulated and communicated
to our management, including our Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow for timely decisions regarding required disclosure. In designing and
evaluating the disclosure controls and procedures, management recognizes that any controls and
procedures, no matter how well-designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management is required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and procedures.
As required by SEC Rule 13a-15(b), we carried out an evaluation, under the supervision and with the
participation of our management, including our Chief Executive Officer and our Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure controls and procedures
as of the end of the quarter covered by this report. Based on the foregoing, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and procedures were
effective at the reasonable assurance level.
There has been no change in our controls over financial reporting during our most recent fiscal
quarter that has materially affected, or is reasonably likely to materially affect, our internal
controls over financial reporting.
37
PART II OTHER INFORMATION
This document and supporting schedules contain statements that are not historical facts and
constitute projections, forecasts or forward-looking statements. These forward-looking statements
reflect only our best assessment at this time, and may be identified by the use of words or phrases
such as anticipate, believe, expect, intend, may, planned, potential, should,
will, would or similar phrases. Such forward-looking statements involve risks and uncertainty;
actual results may differ materially from such statements, and undue reliance should not be placed
on such statements. Readers are cautioned that these forward-looking statements are only
predictions and are subject to risks, uncertainties and assumptions that are difficult to predict.
Therefore, actual results may differ materially and adversely from those expressed in any
forward-looking statements. We undertake no obligation to revise or update any forward-looking
statements for any reason.
Item 1A. Risk Factors
The following factors are the most significant factors that can impact period-to-period comparisons
and may affect the future performance of our businesses. New risks may emerge, and management
cannot predict those risks or estimate the extent to which they may affect our financial
performance.
|
|
|
Our high level of debt, as well as incurrence of additional debt, may limit our operating
flexibility, which could adversely affect our results of operations and financial condition
and prevent us from fulfilling our obligations. |
|
|
|
|
Our cost-reduction projects may not result in anticipated savings in operating costs. |
|
|
|
|
Slowdowns in the retail, travel, restaurant and bar, or entertainment industries, such as
those caused by general economic downturns, terrorism, health concerns or strikes or
bankruptcies within those industries, could reduce our revenues and production activity
levels. |
|
|
|
|
If we have a fair value impairment in a business segment, net earnings and net worth
could be materially adversely affected by a write down of goodwill or intangible assets. |
|
|
|
|
We face intense competition and competitive pressures that could adversely affect our
results of operations and financial condition. |
|
|
|
|
International economic and political factors could affect demand for imports and exports,
and our financial condition and results of operations could be adversely impacted as a
result. |
|
|
|
|
We may not be able to effectively integrate future businesses we acquire. |
|
|
|
|
We may not be able to achieve the international growth contemplated by our strategic
plan. |
|
|
|
|
Natural gas, the principal fuel we use to manufacture our products, is subject to
fluctuating prices; fluctuations in natural gas prices could adversely affect our results of
operations and financial condition. |
|
|
|
|
If we are unable to obtain sourced products or materials at favorable prices, our
operating performance may be adversely affected. |
|
|
|
|
Charges related to our employee pension and postretirement welfare plans resulting from
market risk and headcount realignment may adversely affect our results of operations and
financial condition. |
|
|
|
|
Our business requires significant capital investment and maintenance expenditures that we
may be unable to fulfill. |
|
|
|
|
Our business requires us to maintain a large fixed cost base that can affect our
profitability. |
|
|
|
|
Unexpected equipment failures may lead to production curtailments or shutdowns. |
|
|
|
|
If our investments in new technology and other capital expenditures do not yield expected
returns, our results of operations could be reduced. |
|
|
|
|
We rely on increasingly complex information systems for management of our manufacturing,
distribution, sales and other functions. If our information systems fail to perform these
functions adequately or if we experience an interruption in their operation, our business
and results of operations could suffer. |
38
|
|
|
We may not be able to renegotiate collective bargaining agreements successfully when they
expire; organized strikes or work stoppages by unionized employees may have an adverse
effect on our operating performance. |
|
|
|
|
We are subject to risks associated with operating in foreign countries. These risks could
adversely affect our results of operations and financial condition. |
|
|
|
|
High levels of inflation and high interest rates in Mexico could adversely affect the
operating results and cash flows of Crisa. |
|
|
|
|
Fluctuation of the currencies in which we conduct operations could adversely affect our
financial condition and results of operations. |
|
|
|
|
Fluctuations in the value of the foreign currencies in which we operate relative to the
U.S. dollar could reduce the cost competitiveness of our products or those of our
subsidiaries. |
|
|
|
|
Devaluation or depreciation of, or governmental conversion controls over, the foreign
currencies in which we operate could affect our ability to convert the earnings of our
foreign subsidiaries into U.S. dollars. |
|
|
|
|
If our hedges do not qualify as highly effective or if we do not believe that forecasted
transactions would occur, the changes in the fair value of the derivatives used as hedges
would be reflected in our earnings. |
|
|
|
|
We are subject to various environmental legal requirements and may be subject to new
legal requirements in the future; these requirements could have a material adverse effect on
our operations. |
|
|
|
|
We received notice from the New York Stock Exchange (NYSE) that our stock was delisted
before the start of trading on April 20, 2009. Our shares are now traded on the Over the
Counter Bulletin Board (OTC BB). There can be no assurance that we may be able to regain
our listing on the NYSE or any other exchange. |
|
|
|
|
Our failure to protect our intellectual property or prevail in any intellectual property
litigation could materially and adversely affect our competitive position, reduce revenue or
otherwise harm our business. |
|
|
|
|
Our business may suffer if we do not retain our senior management. |
|
|
|
|
Payment of severance or retirement benefits earlier than anticipated could strain our
cash flow. |
|
|
|
|
We may face a risk when we return to the market to refinance our debt as a result of the
February, 2009 downgrade of the Companys debt by Moodys Investor Service. |
39
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuers Purchases of Equity Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of |
|
|
|
|
|
|
|
|
Shares Purchased as |
|
Maximum Number of |
|
|
|
|
|
|
Part of Publicly |
|
Shares that May Yet Be |
|
|
Total Number of |
|
Average Price |
|
Announced Plans or |
|
Purchased Under the |
Period |
|
Shares Purchased |
|
Paid per Share |
|
Programs |
|
Plans or Programs (1) |
|
January 1 to January 31, 2009
|
|
|
|
|
|
|
|
|
1,000,000 |
|
February 1 to February 28, 2009
|
|
|
|
|
|
|
|
|
1,000,000 |
|
March 1 to March 31, 2009
|
|
|
|
|
|
|
|
|
1,000,000 |
|
|
Total
|
|
|
|
|
|
|
|
|
1,000,000 |
|
|
|
|
|
(1) |
|
We announced on December 10, 2002, that our Board of Directors authorized the purchase of up
to 2,500,000 shares of our common stock in the open market and negotiated purchases. There is
no expiration date for this plan. In 2003, 1,500,000 shares of our common stock were purchased
for $38.9 million. No additional shares were purchased in 2008, 2007, 2006, 2005 or 2004. Our
ABL Facility and the indentures governing the Senior Secured Notes and the PIK Notes
significantly restrict our ability to repurchase additional shares. |
Item 5. Other Information
(b) |
|
There has been no material change to the procedures by which security holders may recommend
nominees to the Companys board of directors. |
40
Item 6. Exhibits
Exhibits: The exhibits listed in the accompanying Exhibit Index are filed as part of this report.
EXHIBIT INDEX
|
|
|
Exhibit |
|
|
Number |
|
Description |
|
|
|
3.1
|
|
Restated Certificate of Incorporation of Libbey Inc. (filed as Exhibit 3.1 to Registrants Quarterly
Report on Form 10-Q for the quarter ended June 30, 1993 and incorporated herein by reference). |
|
|
|
3.2
|
|
Amended and Restated By-Laws of Libbey Inc. (filed as Exhibit 3.01 to Registrants Form 8-K filed
February 7, 2005 and incorporated herein by reference). |
|
|
|
4.1
|
|
Credit Agreement, dated June 16, 2006, among Libbey Glass Inc. and Libbey Europe B.V., Libbey Inc.,
the other loan parties party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., J.P.
Morgan Europe Limited, LaSalle Bank Midwest National Association, Wells Fargo Foothill, LLC, Fifth
Third Bank, and J.P. Morgan Securities Inc., as Sole Bookrunner and Sole Lead Arranger. (filed as
Exhibit 4.1 to Registrants Form 8-K filed June 21, 2006 and incorporated herein by reference). |
|
|
|
4.2
|
|
Indenture, dated June 16, 2006, among Libbey Glass Inc., Libbey Inc., the Subsidiary Guarantors
party thereto and The Bank of New York Trust Company, N.A., as trustee. (filed as Exhibit 4.5 to
Registrants Form 8-K filed June 21, 2006 and incorporated herein by reference). |
|
|
|
4.3
|
|
Form of Floating Rate Senior Secured Note due 2011. (filed as Exhibit 4.4 to Libbey Glass Inc.s
Registration Statement on Form S-4; File No. 333-139358). |
|
|
|
4.4
|
|
Registration Rights Agreement, dated June 16, 2006, among Libbey Glass Inc., Libbey Inc., the
Subsidiary Guarantors party thereto and the Initial Purchasers named therein. (filed as Exhibit 4.4
to Registrants Form 8-K filed June 21, 2006 and incorporated herein by reference). |
|
|
|
4.5
|
|
Indenture, dated June 16, 2006, among Libbey Glass Inc., Libbey Inc., the Subsidiary Guarantors
party thereto and Merrill Lynch PCG, Inc. (filed as Exhibit 4.5 to Registrants Form 8-K filed June
21, 2006 and incorporated herein by reference). |
|
|
|
4.6
|
|
Form of 16% Senior Subordinated Secured Pay-in-Kind Note due 2011. (filed as Exhibit 4.6 to
Registrants Form 8-K filed June 21, 2006 and incorporated herein by reference). |
|
|
|
4.7
|
|
Warrant, issued June 16, 2006. (filed as Exhibit 4.7 to Registrants Form 8-K filed June 21, 2006
and incorporated herein by reference). |
|
|
|
4.8
|
|
Registration Rights Agreement, dated June 16, 2006, among Libbey Inc. and Merrill Lynch PCG, Inc.
(filed as Exhibit 4.8 to Registrants Form 8-K filed June 21, 2006 and incorporated herein by
reference). |
|
|
|
4.9
|
|
Intercreditor Agreement, dated June 16, 2006, among Libbey Glass Inc., JPMorgan Chase Bank, N.A.,
The Bank of New York Trust Company, N.A., Merrill Lynch PCG, Inc. and the Loan Parties party
thereto. (filed as Exhibit 4.9 to Registrants Form 8-K filed June 21, 2006 and incorporated herein
by reference). |
|
|
|
4.10
|
|
Amendment and Waiver, dated November 7, 2008, among Libbey Glass Inc. and Libbey Europe B.V., Libbey
Inc., the other loan parties thereto, JPMorgan Chase Bank, N.A., J.P. Morgan Europe Limited, Bank of
America, N.A. (f/k/a LaSalle Bank Midwest National Association), Wells Fargo Foothill, LLC, Fifth
Third Bank, and J.P. Morgan Securities Inc., as Sole Bookrunner and Sole Lead Arranger (filed as
Exhibit 4.10 to Libbey Incs Quarterly Report on Form 10-Q for the quarter ended September 30, 2008
and incorporated herein by reference). |
|
|
|
10.1
|
|
Pension and Savings Plan Agreement dated as of June 17, 1993 between Owens-Illinois, Inc. and Libbey
Inc. (filed as Exhibit 10.4 to Libbey Inc.s Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993 and incorporated herein by reference). |
|
|
|
10.2
|
|
Cross-Indemnity Agreement dated as of June 24, 1993 between Owens-Illinois, Inc. and Libbey Inc.
(filed as Exhibit 10.5 to Libbey Inc.s Quarterly Report on Form 10-Q for the quarter ended June 30,
1993 and incorporated herein by reference). |
|
|
|
10.3
|
|
The Amended and Restated Libbey Inc. Stock Option Plan for Key Employees (filed as Exhibit 10.14 to
Libbey Inc.s Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 and incorporated
herein by reference). |
|
|
|
10.4
|
|
Libbey Inc. Guarantee dated as of October 10, 1995 in favor of The Pfaltzgraff Co., The Pfaltzgraff
Outlet Co. and Syracuse China Company of Canada Ltd. guaranteeing certain obligations of
LG Acquisition Corp. and Libbey Canada Inc. under the Asset Purchase Agreement for the Acquisition
of Syracuse China (Exhibit 2.0) in the event certain contingencies occur (filed as Exhibit 10.17 to
Libbey Inc.s Current Report on Form 8-K dated October 10, 1995 and incorporated herein by
reference). |
|
|
|
10.5
|
|
Susquehanna Pfaltzgraff Co. Guarantee dated as of October 10, 1995 in favor of LG Acquisition Corp.
and Libbey Canada Inc. guaranteeing certain obligations of The Pfaltzgraff Co., The Pfaltzgraff
Outlet Co. and Syracuse China Company of Canada, Ltd. under the Asset Purchase Agreement for the
Acquisition of Syracuse China (Exhibit 2.0) in the event certain contingencies occur (filed as
Exhibit 10.18 to Libbey Inc.s Current Report on Form 8-K dated October 10, 1995 and |
41
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Exhibit |
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Number |
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Description |
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incorporated herein by reference). |
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10.6
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First Amended and Restated Libbey Inc. Executive Savings Plan (filed as Exhibit 10.23 to
Libbey Inc.s Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated
herein by reference). |
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10.7
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Form of Non-Qualified Stock Option Agreement between Libbey Inc. and certain key employees
participating in The 1999 Equity Participation Plan of Libbey Inc. (filed as Exhibit 10.69 to
Libbey Inc.s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 and
incorporated herein by reference). |
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10.8
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The 1999 Equity Participation Plan of Libbey Inc. (filed as Exhibit 10.67 to Libbey Inc.s Annual
Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference). |
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10.9
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Stock Promissory Sale and Purchase Agreement between VAA Vista Alegre Atlantis SGPS, SA and Libbey
Europe B.V. dated January 10, 2005 (filed as Exhibit 10.76 to Libbey Inc.s Annual Report on
Form 10-K for the year ended December 31, 2004 and incorporated herein by reference). |
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10.10
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RMB Loan Contract between Libbey Glassware (China) Company Limited and China Construction Bank
Corporation Langfang Economic Development Area Sub-branch entered into January 23, 2006 (filed as
exhibit 10.75 to Libbey Inc.s Annual Report on Form 10-K for the year ended December 31, 2005 and
incorporated herein by reference). |
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10.11
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Guarantee Contract executed by Libbey Inc. for the benefit of China Construction Bank Corporation
Langfang Economic Development Area Sub-branch (filed as exhibit 10.76 to Libbey Inc.s Annual Report
on Form 10-K for the year ended December 31, 2005 and incorporated herein by reference). |
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10.12
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Guaranty, dated May 31, 2006, executed by Libbey Inc. in favor of Fondo Stiva S.A. de C.V. (filed as
exhibit 10.2 to Libbey Inc.s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 and
incorporated herein by reference). |
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10.13
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Guaranty Agreement, dated June 16, 2006, executed by Libbey Inc. in favor of Vitro, S.A. de C.V.
(filed as exhibit 10.3 to Libbey Inc.s Quarterly Report on Form 10-Q for the quarter ended June 30,
2006 and incorporated herein by reference). |
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10.14
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Transition Services Agreement, dated June 16, 2006, among Crisa Libbey S.A. de C.V., Vitrocrisa
Holding, S. de R.L. de C.V., Vitrocrisa S. de R.L. de C.V., Vitrocrisa Comercial, S. de R.L. de
C.V., Crisa Industrial, L.L.C. and Vitro S.A. de C.V. (filed as exhibit 10.1 to Libbey Inc.s
Current Report on Form 8-K filed June 21, 2006 and incorporated herein by reference). |
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10.15
|
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2006 Omnibus Incentive Plan of Libbey Inc. (filed as Exhibit 10.1 to Registrants Quarterly Report
on Form 10-Q for the quarter ended March 31, 2006 and incorporated herein by reference). |
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10.16
|
|
Libbey Inc. Amended and Restated Deferred Compensation Plan for Outside Directors (incorporated by
reference to Exhibit 10.61 to Libbey Glass Inc.s Registration Statement on Form S-4; File
No. 333-139358). |
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10.17
|
|
Form of Registered Global Floating Rate Senior Secured Note, Series B, due 2011 (filed as exhibit
10.55 to Libbey Inc.s Annual Report on Form 10-K for the year ended December 31, 2006 and
incorporated herein by reference). |
|
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10.18
|
|
2009 Director Deferred Compensation Plan (filed as Exhibit 10.51 to Libbey Incs Quarterly Report on
Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by reference). |
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10.19
|
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Executive Deferred Compensation Plan (filed as Exhibit 10.52 to Libbey Incs Quarterly Report on
Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by reference). |
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10.20
|
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Amended and Restated Employment Agreement dated as of December 31, 2008 between Libbey Inc. and John
F. Meier (filed as exhibit 10.29 to Libbey Inc.s Annual Report on Form 10-K for the year ended
December 31, 2008 and incorporated herein by reference). |
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10.21
|
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Amended and Restated Employment Agreement dated as of December 31, 2008 between Libbey Inc. and
Richard I. Reynolds (filed as exhibit 10.30 to Libbey Inc.s Annual Report on Form 10-K for the year
ended December 31, 2008 and incorporated herein by reference). |
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10.22
|
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Amended and Restated Employment Agreement dated as of December 31, 2008 between Libbey Inc. and
Gregory T. Geswein (filed as exhibit 10.31 to Libbey Inc.s Annual Report on Form 10-K for the year
ended December 31, 2008 and incorporated herein by reference). |
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10.23
|
|
Form of Amended and Restated Employment Agreement dated as of December 31, 2008 between Libbey Inc.
and the respective executive officers identified on Appendix 1 thereto (filed as exhibit 10.32 to
Libbey Inc.s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated
herein by reference). |
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10.24
|
|
Amended and restated change in control agreement dated as of December 31, 2008 between Libbey Inc.
and John F. Meier (filed as exhibit 10.33 to Libbey Inc.s Annual Report on Form 10-K for the year
ended December 31, 2008 and incorporated herein by reference). |
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10.25
|
|
Form of amended and restated change in control agreement dated as of December 31, 2008 between
Libbey Inc. and the respective executive officers identified on Appendix 1 thereto (filed as exhibit
10.34 to Libbey Inc.s Annual Report on Form 10-K for the year ended December 31, 2008 and
incorporated herein by reference). |
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10.26
|
|
Form of amended and restated change in control agreement dated as of December 31, 2008 between
Libbey Inc. and the respective individuals identified on Appendix 1 thereto (filed as exhibit 10.35
to Libbey Inc.s Annual Report on Form 10-K |
42
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Exhibit |
|
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Number |
|
Description |
|
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for the year ended December 31, 2008 and incorporated herein by reference). |
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10.27
|
|
Form of Amended and Restated Indemnity Agreement dated as of December 31, 2008 between Libbey Inc.
and the respective officers identified on Appendix 1 thereto (filed as exhibit 10.36 to Libbey
Inc.s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by
reference). |
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10.28
|
|
Form of Amended and Restated Indemnity Agreement dated as of December 31, 2008 between Libbey Inc.
and the respective outside directors identified on Appendix 1 thereto (filed as exhibit 10.37 to
Libbey Inc.s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated
herein by reference). |
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10.29
|
|
Amended and Restated Libbey Inc. Supplemental Retirement Benefit Plan effective December 31, 2008
(filed as exhibit 10.38 to Libbey Inc.s Annual Report on Form 10-K for the year ended December 31,
2008 and incorporated herein by reference). |
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10.30
|
|
Amendment to the First Amended and Restated Libbey Inc. Executive Savings Plan effective December
31, 2008 (filed as exhibit 10.39 to Libbey Inc.s Annual Report on Form 10-K for the year ended
December 31, 2008 and incorporated herein by reference). |
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31.1
|
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Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) (filed herein). |
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31.2
|
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) (filed herein). |
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32.1
|
|
Chief Executive Officer Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To
Section 906 Of The Sarbanes-Oxley Act of 2002 (filed herein). |
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32.2
|
|
Chief Financial Officer Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To
Section 906 Of The Sarbanes-Oxley Act of 2002 (filed herein). |
43
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
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LIBBEY INC.
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Date: May 11, 2009 |
By |
/s/ Gregory T. Geswein
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Gregory T. Geswein, |
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Vice President, Chief Financial Officer |
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44