EX-99.1 2 l30127aexv99w1.htm EX-99.1 EX-99.1
 

Exhibit 99.1
     
(LIBBEY LOGO)
  Libbey Inc.
300 Madison Ave
P.O. Box 10060
Toledo, OH 43699
NEWS RELEASE
     
AT THE COMPANY:
    
Kenneth Boerger
  Greg Geswein
VP/Treasurer
  VP/Chief Financial Officer
(419) 325-2279
  (419) 325-2451
 
    
FOR IMMEDIATE RELEASE
    
THURSDAY, FEBRUARY 14, 2008
    
LIBBEY INC. ANNOUNCES FOURTH QUARTER RESULTS
ALL-TIME RECORD QUARTERLY SALES OF $225.1 MILLION
•   Sales Increase 5.5 Percent for Quarter and 18.1 Percent for Full Year
 
•   International Sales Increase 31.9 Percent for the Quarter and 28.0 Percent for Full Year
 
•   Sales for Full Year Increase 6.6 Percent Over 2006 Pro Forma Sales (Giving Effect to Crisa Acquisition)
 
•   Cash Flow From Operations $35.8 Million in Fourth Quarter
 
•   Income From Operations of $20.5 Million in Fourth Quarter and $66.1 Million for Full Year
 
•   Reported Net Loss of $5.0 million in Fourth Quarter and $2.3 Million for Full Year
 
•   EBITDA of $35.1 Million for Fourth Quarter, $7.1 Million Better Than Upper End of Guidance
 
•   Full Year 2007 EBITDA of $116.5 Million
TOLEDO, OHIO, FEBRUARY 14, 2008—Libbey Inc. (NYSE: LBY) announced today that sales increased 5.5 percent to an all-time record $225.1 million in the fourth quarter of 2007 from $213.4 million in the prior year fourth quarter. Libbey reported a net loss of $5.0 million, or $0.34 per share, for the fourth quarter ended December 31, 2007, compared to a net loss of $8.5 million, or $0.60 per share, in the prior year quarter.
In the fourth quarter of 2007, Libbey recorded a non-cash tax charge of $15.3 million to establish a full valuation allowance against its net deferred tax assets in the United States. The valuation allowance does not reflect a change in the Company’s long-term financial outlook; it relates to the U.S. GAAP accounting requirements in situations where a company has a cumulative pre-tax loss in recent years. Excluding this non-cash charge of $15.3 million for the tax valuation allowance, net income would have been $10.3 million (see Table 4) and diluted earnings per share would have been $0.71 for the fourth quarter. The establishment of a valuation allowance has no impact on cash, and we expect to utilize our loss carry-forwards and other deferred tax assets when our U.S. operations generate future pre-tax profits.
Fourth Quarter Results
For the quarter-ended December 31, 2007, sales increased 5.5 percent to $225.1 million from $213.4 million in the year-ago quarter. Sales of the North American Glass segment were flat at $155.8 million versus $156.0 million in the fourth quarter of 2006 (see Table
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7). The sales results were attributable to approximately 5 percent growth of the sales of Crisa product, a 9.5 percent increase in shipments to U. S. and Canadian retail glassware customers and an approximately 5 percent reduction in sales to foodservice and industrial glassware customers. North American Other sales increased 8.6 percent, as shipments of Syracuse China products were up over 25 percent. Shipments to World Tableware and Traex customers were down less than 2 percent. International segment sales increased 31.9 percent as the result of increased shipments to customers of Royal Leerdam, Crisal and Libbey China and 10.8 percent favorable currency impact.
The Company reported income from operations of $20.5 million during the quarter, compared to income from operations of $9.5 million in the year-ago quarter. Income from operations, excluding special charges (see Table 2), was $12.8 million during the fourth quarter of 2006. Factors contributing to the increase in income from operations were higher sales, lower selling, general and administrative expenses and a litigation settlement of approximately $1.8 million.
Earnings before interest and taxes (EBIT) increased to $25.3 million from $8.5 million in the year-ago quarter as a result of the higher income from operations and other income of $4.7 million primarily related to a $4.3 million gain on the sale of land in the Netherlands. EBIT increased by $11.9 million to $15.7 million for North American Glass, primarily as a result of the improved income from operations. North American Other reported EBIT for the fourth quarter of 2007 of $4.4 million compared to $4.6 million in the year-ago quarter. The International segment reported improved EBIT of $5.2 million, compared to EBIT of $0.1 million in the fourth quarter of 2006, benefiting from the higher sales and margins at Royal Leerdam and a $4.3 million gain on the sale of land at Royal Leerdam.
Libbey reported that EBITDA increased to $35.1 million in the fourth quarter of 2007 compared to adjusted EBITDA, as detailed in Table 3, of $20.4 million in the year-ago quarter. Contributing to this increase was primarily the higher income from operations and gain on the sale of land as detailed above.
Interest expense decreased by $0.3 million to $16.9 million, compared to $17.2 million in the year-ago period, as the result of lower average revolving debt.
The effective tax rate increased to 159.6 percent for the quarter compared to 2.4 percent in the year-ago quarter. In the fourth quarter of 2007, Libbey recorded a non-cash tax charge of $15.3 million to establish a full valuation allowance against its net deferred tax assets in the United States. SFAS No. 109 requires that companies assess whether valuation allowances should be established against their deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. In making such judgments, significant weight is given to evidence that can be objectively verified. The Company’s current or previous losses are given more weight than its future outlook, and a recent historical cumulative loss is considered a significant factor that is difficult to overcome.
Libbey reported a net loss of $5.0 million, or $0.34 per share, for the fourth quarter ended December 31, 2007, compared to a net loss of $8.5 million, or $0.60 per share, in the
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prior year quarter. Excluding the non-cash charge of $15.3 million for the tax valuation allowance, net income would have been $10.3 million (see Table 4) and diluted earnings per share would have been $0.71 for the fourth quarter.
Twelve-Month Results
For the twelve months ended December 31, 2007, sales increased 18.1 percent, including a favorable currency impact of 1.4 percent, to $814.2 million from $689.5 million in 2006. North American Glass sales increased 19.3 percent to $568.5 million (see Table 7). The increase in sales was primarily attributable to the full year consolidation of the sales of Crisa and an increase of more than 11 percent in shipments to U.S. and Canadian retail glassware customers. North American Other sales increased 5.8 percent as shipments of World Tableware products increased 9.0 percent, shipments of Syracuse China products were up 5.0 percent and Traex sales increased less than 1 percent. International sales increased 28.0 percent to $136.7 million on the strength of increased shipments of both Royal Leerdam and Crisal products, the addition of shipments from Libbey China and favorable currency impact of 8.3 percent. On a pro forma basis, giving effect to the consolidation of Crisa as of January 1, 2006, as detailed in the attached Table 6, sales were up 6.6 percent.
Libbey reported income from operations of $66.1 million during 2007 compared to income from operations of $19.3 million for 2006. Income from operations margin of 8.1 percent for the full year 2007 was the highest percentage margin in five years. Adjusted income from operations, excluding special charges (see Table 2), was $37.8 million for the full year 2006. Primary contributors to the increase in income from operations were the consolidation of Crisa including the benefit of the capacity rationalization, higher overall sales and improved margins.
Earnings before interest and taxes (EBIT) increased to $74.9 million from $18.0 million in 2006. EBIT increased by $49.0 million to $54.5 million for North American Glass as a result of the full year consolidation of Crisa, higher sales and the benefits of the capacity rationalization at Crisa realized during 2007. The North American Other segment reported EBIT for 2007 of $15.7 million, compared to $9.4 million in 2006, as a result of higher sales, improved margins and the $1.1 million gain on the sale of land at Syracuse. The International segment also reported improved EBIT of $4.7 million compared to $3.2 million in 2006.
For the twelve months ended December 31, 2007, EBITDA was $116.5 million, a 61.7 percent increase over adjusted EBITDA, as detailed in Table 3 of $72.0 million during 2006. The additional EBITDA was primarily provided by the additional income from operations and other income explained above.
Interest expense increased $19.3 million compared to the year-ago period. Contributing to the increase in interest expense were higher debt and higher average interest rates resulting from the refinancing completed on June 16, 2006.
The effective tax rate increased to 125.7 percent for 2007 compared to 27.1 percent in 2006. In the fourth quarter of 2007, Libbey recorded a non-cash tax charge of $15.3
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million to establish a full valuation allowance against its net deferred tax assets in the United States. The valuation allowance does not reflect a change in the Company’s long-term financial outlook; it relates to the U. S. GAAP accounting requirements when a company has a cumulative pre-tax loss in recent years.
The Company recorded a net loss of $2.3 million, or $0.16 per diluted share for 2007, compared to a net loss of $20.9 million, or $1.47 per diluted share, in the year-ago period. The Company reported that its adjusted net income per diluted share for the full year 2007, as detailed in the attached Table 4, and excluding the tax valuation allowance of $15.3 million, was $0.90 per diluted share. This compares to adjusted diluted loss per share of $1.47 in 2006.
Cash Flow and Liquidity
Cash flow from operations in 2007 was $51.5 million as compared to $54.9 million in the year-ago period. Free cash flow, as detailed on Table 5, increased to $16.5 million from a use of cash of $97.2 million in 2006. Lower capital expenditures, the absence of an acquisition and related costs in 2007 and proceeds from asset sales all contributed to the improvement in 2007.
As of December 31, 2007, working capital, defined as inventories and accounts receivable less accounts payable, increased by $12.5 million from $188.4 million to $200.9 million compared to December 31, 2006, primarily as the result of the working capital investment at the new production facility in China and higher inventories in the United States and Portugal. Working capital as a percentage of net sales was 24.7 percent in 2007, which compares to working capital as a percentage of 2006 pro forma net sales (see Table 6) of 24.7 percent.
Libbey reported that it had available capacity of $89.7 million under its Asset Backed Loan (ABL) credit facility as of December 31, 2007. This compares to availability of $44.7 million at December 31, 2006.
Outlook for 2008
John F. Meier, chairman and chief executive officer, commenting on the quarter said, “We are extremely pleased with the strength of our fourth quarter and full year 2007 performance. We experienced increases in retail, foodservice, industrial and international glassware shipments during 2007. Sales to European glassware customers were robust. Crisa saw the benefits of the consolidation of their facilities.” He added, “We expect first quarter sales to be in the range of $185 million to $190 million, given the strength of our sales in the retail channel of distribution in North America and of our International operations during the fourth quarter of 2007. Earnings before interest, taxes, depreciation and amortization (EBITDA) are expected to be between $20 million and $22 million in the first quarter of 2008.”
Libbey also reported that it expects sales for 2008 to be in the range of $850 million to $870 million. Mr. Meier added, “With EBITDA expected to be in the range of $113
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million to $123 million for 2008, we are anticipating solid growth over 2007 EBITDA of $116.5 million which included $5.5 million in gains on the sale of excess land.”
Webcast Information
Libbey will hold a conference call for investors on Thursday, February 14, 2008, at 11 a.m. Eastern Standard Time. The conference call will be simulcast live on the Internet on both www.libbey.com and http://phx.corporate-ir.net/phoenix.zhtml?c=64169&p=irol-irhome. To listen to the call, please go to the website at least 10 minutes early to register, download and install any necessary software. A replay will be available for 30 days after the conclusion of the call.
This press release includes forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such statements only reflect the Company’s best assessment at this time and are indicated by words or phrases such as “goal,” “expects,” “ believes,” “will,” “estimates,” “anticipates,” or similar phrases. Investors are cautioned that forward-looking statements involve risks and uncertainty, that actual results may differ materially from such statements, and that investors should not place undue reliance on such statements. These forward-looking statements may be affected by the risks and uncertainties in the Company’s business. This information is qualified in its entirety by cautionary statements and risk factor disclosures contained in the Company’s Securities and Exchange Commission filings, including the Company’s report on Form 10-K filed with the Commission on March 16, 2007. Important factors potentially affecting performance include but are not limited to increased competition from foreign suppliers endeavoring to sell glass tableware in the United States and Mexico; the impact of lower duties for imported products; major slowdowns in the retail, travel or entertainment industries in the United States, Canada, Mexico, Western Europe and Asia, caused by terrorist attacks or otherwise; significant increases in per-unit costs for natural gas, electricity, corrugated packaging, and other purchased materials; higher indebtedness related to the Crisa acquisition; higher interest rates that increase the Company’s borrowing costs; protracted work stoppages related to collective bargaining agreements; increases in expense associated with higher medical costs, increased pension expense associated with lower returns on pension investments and increased pension obligations; devaluations and other major currency fluctuations relative to the U.S. dollar and the Euro that could reduce the cost competitiveness of the Company’s products compared to foreign competition; the effect of high inflation in Mexico and exchange rate changes to the value of the Mexican peso and the earnings and cash flow of Crisa, expressed under U.S. GAAP; the inability to achieve savings and profit improvements at targeted levels in the Company’s operations or within the intended time periods; and whether the Company completes any significant acquisition and whether such acquisitions can operate profitably. With respect to its expectations regarding the Crisa acquisition, these factors also include the ability of Vitro to supply necessary services to Crisa.
Libbey Inc.:
•   is the largest manufacturer of glass tableware in the western hemisphere and one of the largest glass tableware manufacturers in the world;
 
•   is expanding its international presence with facilities in China, Mexico, the Netherlands and Portugal;
 
•   is the leading manufacturer of tabletop products for the U.S. foodservice industry; and
 
•   supplies products to foodservice, retail, industrial and business-to-business customers in over 100 countries.
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Based in Toledo, Ohio, the Company operates glass tableware manufacturing plants in the United States in Louisiana and Ohio, as well as in Mexico, China, Portugal and the Netherlands. Its Crisa subsidiary, located in Monterrey, Mexico, is the leading producer of glass tableware in Mexico and Latin America. Its Royal Leerdam subsidiary, located in Leerdam, Netherlands, is among the world leaders in producing and selling glass stemware to retail, foodservice and industrial clients. Its Crisal subsidiary, located in Portugal, provides an expanded presence in Europe. Its Syracuse China subsidiary designs, manufactures and distributes an extensive line of high-quality ceramic dinnerware, principally for foodservice establishments in the United States. Its World Tableware subsidiary imports and sells a full-line of metal flatware and holloware and an assortment of ceramic dinnerware and other tabletop items principally for foodservice establishments in the United States. Its Traex subsidiary, located in Wisconsin, designs, manufactures and distributes an extensive line of plastic items for the foodservice industry. In 2007, Libbey Inc.’s net sales totaled $814.2 million.
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LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per-share amounts)
                 
    THREE MONTHS ENDED  
    December 31, 2007     December 31, 2006  
Net sales
   $ 225,110     $ 213,361  
Freight billed to customers
     676       534  
 
            
Total revenues
     225,786       213,895  
 
                
Cost of sales (1)
     182,971       172,617  
 
            
Gross profit
     42,815       41,278  
 
                
Selling, general and administrative expenses
    22,296       28,055  
Special charges (1)
     —       3,747  
 
            
Income from operations
     20,519       9,476  
Other income (expense)
     4,733       (992 )
 
            
Earnings before interest, income taxes and minority interest
     25,252       8,484  
 
                
Interest expense
     16,939       17,234  
 
            
 
                
Income (loss) before income taxes and minority interest
     8,313       (8,750 )
 
                
Provision (benefit) for income taxes
     13,267       (212 )
 
            
Net loss
   $ (4,954 )   $ (8,538 )
 
            
 
                
Net loss per share:
                
Basic
   $ (0.34 )   $ (0.60 )
 
            
Diluted
   $ (0.34 )   $ (0.60 )
 
            
 
                
Weighted average shares:
                
Outstanding
     14,553       14,311  
 
            
Diluted
     14,553       14,311  
 
            
 
(1)   Refer to Table 1 for Special charges detail.

 

 

LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per-share amounts)
                 
    TWELVE MONTHS ENDED  
    December 31, 2007     December 31, 2006 (2)  
Net sales
   $ 814,160     $ 689,480  
Freight billed to customers
     2,207       2,921  
 
            
Total revenues
     816,367       692,401  
 
                
Cost of sales (1)
     658,698       569,237  
 
            
Gross profit
     157,669       123,164  
 
                
Selling, general and administrative expenses
     91,568       87,566  
Special charges (1)
     —       16,334  
 
            
Income from operations
     66,101       19,264  
Equity income — pretax
     —       1,986  
Other income (expense)
     8,778       (3,236 )
 
            
 
                
Earnings before interest, income taxes and minority interest
     74,879       18,014  
 
                
Interest expense (1)
     65,888       46,594  
 
            
 
                
Income (loss) before income taxes and minority interest
     8,991       (28,580 )
 
                
Provision (benefit) for income taxes
     11,298       (7,747 )
 
            
 
                
Loss before minority interest
     (2,307 )     (20,833 )
 
                
Minority interest
     —       (66 )
 
                
 
            
Net loss
   $ (2,307 )   $ (20,899 )
 
            
 
                
Net loss per share:
                
Basic
   $ (0.16 )   $ (1.47 )
 
            
Diluted
   $ (0.16 )   $ (1.47 )
 
            
 
                
Weighted average shares:
                
Outstanding
     14,472       14,182  
 
            
Diluted
     14,472       14,182  
 
            
 
(1)

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

Crisa results for January 1, 2006 through June 15, 2006 are reflected in equity earnings. Crisa results for June 16, 2006 through December 31, 2006 are included in the consolidated statement of operations above.

 

 

LIBBEY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
                         
    December 31, 2007     September 30, 2007     December 31, 2006  
            (unaudited)          
ASSETS
                        
 
                        
Cash
   $ 36,539     $ 13,406     $ 41,766  
Accounts receivable — net
     93,333       108,993       96,783  
Inventories — net
     182,942       185,776       159,123  
Other current assets
     20,072       15,449       23,172  
 
                  
Total current assets
     332,886       323,624       320,844  
 
                        
Other assets
     33,246       45,190       38,674  
 
                        
Goodwill and purchased intangibles — net
     208,091       207,829       206,372  
 
                        
Property, plant and equipment — net
     324,889       320,440       312,241  
 
                  
 
                        
Total assets
   $ 899,112     $ 897,083     $ 878,131  
 
                  
 
                        
LIABILITIES AND SHAREHOLDERS’ EQUITY
                        
 
                        
Notes payable
   $ 622     $ 1,637     $ 226  
Accounts payable
     75,387       71,824       67,493  
Accrued liabilities
     68,318       81,839       76,301  
Payable to Vitro
     19,575       19,471       —  
Pension liability (current portion)
     1,883       1,389       1,389  
Nonpension postretirement benefits (current portion)
     3,528       3,252       3,252  
Other current liabilities
     11,199       7,508       4,132  
Long-term debt due within one year
     913       794       794  
 
                  
Total current liabilities
     181,425       187,714       153,587  
 
                        
Long-term debt
     495,099       489,311       490,212  
Pension liability
     71,709       75,372       77,174  
Nonpension postretirement benefits
     45,667       37,608       38,495  
Payable to Vitro
     —       —       19,673  
Other liabilities
     12,097       8,809       11,140  
 
                  
Total liabilities
     805,997       798,814       790,281  
 
                        
Common stock, treasury stock, capital in excess of par value and warrants
     196,281       178,408       174,141  
Retained deficit
     (60,689 )     (38,750 )     (40,282 )
Accumulated other comprehensive loss
     (42,477 )     (41,389 )     (46,009 )
 
                  
Total shareholders’ equity
     93,115       98,269       87,850  
 
                  
 
                        
Total liabilities and shareholders’ equity
   $ 899,112     $ 897,083     $ 878,131  
 
                  

 

 

LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Dollars in thousands)
                 
    THREE MONTHS ENDED  
    December 31, 2007     December 31, 2006  
Operating activities
                
Net loss
   $ (4,954 )   $ (8,538 )
Adjustments to reconcile net loss to net cash provided by operating activities:
                
Depreciation and amortization
     9,861       8,508  
Gain on sale of assets
     (3,655 )     —  
Change in accounts receivable
     10,427       10,991  
Change in inventories
     3,037       9,809  
Change in accounts payable
     2,517       (2,486 )
Special charges
     (153 )     1,164  
Pension & nonpension postretirement
     (256 )     457  
Provision for deferred tax valuation allowance
     15,283       —  
Income taxes
     (3,945 )     (14,016 )
Other operating activities
     7,618       17,445  
 
            
Net cash provided by operating activities
     35,780       23,334  
 
                
Investing activities
                
Additions to property, plant and equipment
     (11,129 )     (19,041 )
Business acquistion and related costs — net of cash
     —       (439 )
Proceeds from sale of assets and other
     5,582       —  
 
            
Net cash used in investing activities
     (5,547 )     (19,480 )
 
                
Financing activities
                
Net (repayments) borrowings
     (6,973 )     1,847  
Debt Financing fees and other
     27       (1,603 )
Dividends
     (363 )     (358 )
 
            
Net cash used in financing activities
     (7,309 )     (114 )
 
                
Effect of exchange rate fluctuations on cash
     209       222  
 
            
 
                
Increase in cash
     23,133       3,962  
 
                
Cash at beginning of period
     13,406       37,804  
 
            
 
                
Cash at end of period
   $ 36,539     $ 41,766  
 
            

 

 

LIBBEY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Dollars in thousands)
                 
    TWELVE MONTHS ENDED  
    December 31, 2007     December 31, 2006  
Operating activities
                
Net loss
   $ (2,307 )   $ (20,899 )
Adjustments to reconcile net loss to net cash provided by operating activities:
                
Depreciation and amortization
     41,572       35,720  
Gain on sale of assets
     (4,923 )     —  
Equity loss — net of tax
     —       (1,493 )
Change in accounts receivable
     3,951       9,745  
Change in inventories
     (21,091 )     7,131  
Change in accounts payable
     5,152       (425 )
Special charges
     (920 )     20,023  
Pension & nonpension postretirement
     (3,061 )     9,885  
Provision for deferred tax valuation allowance
     15,283       —  
Income taxes
     (5,012 )     (30,995 )
Other operating activities
     22,813       26,166  
 
            
Net cash provided by operating activities
     51,457       54,858  
 
                
Investing activities
                
Additions to property, plant and equipment
     (43,121 )     (73,598 )
Business acquistion and related costs — net of cash
     —       (78,434 )
Proceeds from sale of assets and other
     8,213       —  
 
            
Net cash used in investing activities
     (34,908 )     (152,032 )
 
                
Financing activities
                
Net (repayments) borrowings
     (20,850 )     152,513  
Debt Financing fees and other
     (111 )     (15,798 )
Dividends
     (1,446 )     (1,417 )
 
            
Net cash (used in) provided by financing activities
     (22,407 )     135,298  
 
                
Effect of exchange rate fluctuations on cash
     631       400  
 
            
 
                
(Decrease) increase in cash
     (5,227 )     38,524  
 
                
Cash at beginning of year
     41,766       3,242  
 
            
 
                
Cash at end of year
   $ 36,539     $ 41,766  
 
            

 

 

Table 1
Summary of Special Charges
(Dollars in thousands)
                                 
    Three Months ended December 31,     Twelve Months ended December 31,  
    2007     2006     2007     2006  
Capacity realignment:
                                
Fixed asset related
   $ —     $ —     $ —     $ —  
Gain on land sales
     —       (359 )     —       (359 )
Employee termination costs & other
     —       61       —       61  
 
                        
Included in Special charges
   $ —     $ (298 )   $ —     $ (298 )
 
                        
 
                                
In August 2004, Libbey announced that it was realigning its production capacity in order to improve its cost structure. Pursuant to the plan, Libbey closed its manufacturing facility in City of Industry, California, in February 2005 and realigned production among its other glass manufacturing facilities.
 
                                
Salary reduction program:
                                
Employee termination costs & other
   $ —     $ (70 )   $ —     $ (70 )
 
                        
Included in Special charges
   $ —     $ (70 )   $ —     $ (70 )
 
                        
 
                                
In June 2005, Libbey reduced its North American salaried workforce by ten percent in order to improve its overall cost profile.
 
                                
Crisa restructuring:
                                
Inventory write-down
   $ —     $ (385 )   $ —     $ 2,158  
 
                        
Included in Cost of sales
     —       (385 )     —       2,158  
 
                                
Fixed asset related
     —       4,115       —       16,702  
 
                        
Included in Special charges
     —       4,115       —       16,702  
 
                        
Crisa restructuring
   $ —     $ 3,730     $ —     $ 18,860  
 
                        
 
                                
In June 2006, Libbey announced plans to consolidate Crisa’s two principal manufacturing facilities.
 
                                
Write-off of finance fees:
                                
Write-off of finance fees
   $ —     $ —     $ —     $ 4,906  
 
                        
Included in Interest expense
   $ —     $ —     $ —     $ 4,906  
 
                        
 
                                
In June 2006, Libbey wrote off unamortized finance fees related to debt refinancing at Libbey and Crisa.
 
                                
Total special charges
   $ —     $ 3,362     $ —     $ 23,398  
 
                        
 
                                
Special charges classifications as shown in the Condensed Consolidated Statement of Operations :
 
                                
Cost of sales
   $ —     $ (385 )   $ —     $ 2,158  
Special charges
     —       3,747       —       16,334  
Interest expense
     —       —       —       4,906  
 
                        
Total special charges
   $ —     $ 3,362     $ —     $ 23,398  
 
                        

 

 

In accordance with the SEC’s Regulation G, the following tables 2, 3 , 4, 5 and 6 provide non-GAAP measures used in the earnings release and a reconciliation to the most closely related Generally Accepted Accounting Principles (GAAP) measure. Libbey believes that providing supplemental non-GAAP financial information is useful to investors in understanding Libbey’s core business and trends. In addition, it is the basis on which Libbey’s management internally assesses performance. Although Libbey believes that the non-GAAP financial measures presented enhance investors’ understanding of Libbey’s business and performance, these non-GAAP measures should not be considered an alternative to GAAP.
Table 2
Reconciliation of Non-GAAP Financial Measures for Special Charges
(Dollars in thousands)
                                 
    Three months ended December 31,     Twelve months ended December 31,  
    2007     2006     2007     2006  
Income from operations
   $ 20,519     $ 9,476     $ 66,101     $ 19,264  
 
Special charges (excluding write-off of finance fees) — pre-tax
     —       3,362       —       18,492  
 
                        
 
Adjusted income from operations
   $ 20,519     $ 12,838     $ 66,101     $ 37,756  
 
                        

 

 

Table 3

Reconciliation of Net Income to Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA) and Adjusted EBITDA
(Dollars in thousands)
                                 
    Three Months ended December 31,     Twelve Months ended December 31,  
    2007     2006     2007     2006  
Reported net loss
   $ (4,954 )   $ (8,538 )   $ (2,307 )   $ (20,899 )
 
                                
Add:
                                
Interest expense
     16,939       17,234       65,888       46,594  
Provision (benefit) for income taxes
     13,267       (212 )     11,298       (7,747 )
Depreciation and amortization (2006 adjusted for minority interest)
     9,861       8,508       41,572       35,556  
 
                        
EBITDA
   $ 35,113     $ 16,992     $ 116,451     $ 53,504  
 
                        
 
                                
Add:
                                
Special charges
     —       3,362       —     18,492  
 
                                
 
                        
Adjusted EBITDA
   $ 35,113     $ 20,354     $ 116,451     $ 71,996  
 
                        
Table 4
Reconciliation of Non-GAAP Financial Measures for Tax Valuation Allowance
(Dollars in thousands)
                                 
    Three months ended December 31,     Twelve months ended December 31,  
    2007     2006     2007     2006  
Adjusted net income (loss):
                                
Reported net loss
   $ (4,954 )   $ (8,538 )   $ (2,307 )   $ (20,899 )
Tax valuation allowance
     15,283       —       15,283       —  
 
                        
Adjusted net income (loss)
   $ 10,329     $ (8,538 )   $ 12,976     $ (20,899 )
 
                        
 
                                
Adjusted net income (loss) per diluted share:
                                
Reported net loss
   $ (0.34 )   $ (0.60 )   $ (0.16 )   $ (1.47 )
Tax valuation allowance
     1.05       —       1.06       —  
 
                        
Adjusted net income (loss) per diluted share
   $ 0.71     $ (0.60 )   $ 0.90     $ (1.47 )
 
                        
Table 5

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
(Dollars in thousands)
                                 
Net cash provided by operating activities
   $ 35,780     $ 23,334     $ 51,457     $ 54,858  
Capital expenditures
     (11,129 )     (19,041 )     (43,121 )     (73,598 )
Acquisitions and related costs
     —       (439 )     —       (78,434 )
Proceeds from asset sales and other
     5,582       —       8,213       —  
 
                        
Free cash flow
   $ 30,233     $ 3,854     $ 16,549     $ (97,174 )
 
                        

 

 

Table 6
Summary Consolidated Pro-forma Results
(Dollars in thousands)
The following table presents the impact of the Crisa acquisition (closed on June 16, 2006) as if it occurred on January 1 of 2006.
         
    Twelve months  
    ended  
    December 31, 2006  
Libbey
        
Net sales
   $ 600,295  
 
        
Earnings (loss) before interest and tax (EBIT)
     30,609  
 
        
Add: special charges
     (368 )
 
        
Less: minority interest (5% for Crisal)
     (66 )
 
      
 
        
Adjusted EBIT
     30,175  
 
        
Pro forma adjustments:
        
Equity earnings
     (1,986 )
 
      
 
        
Libbey adjusted pro forma EBIT
     28,189  
 
        
Depreciation & amortization (adjusted for minority interest)
     30,836  
 
      
 
        
Libbey adjusted pro forma earnings before interest tax depreciation and amortization (EBITDA)
   $ 59,025  
 
      
 
        
Crisa
        
Net sales
   $ 195,812  
 
        
Earnings (loss) before interest and tax (EBIT)
     (4,684 )
 
        
Add: special charges
     18,860  
 
      
 
        
Adjusted EBIT
     14,176  
 
        
Pro forma adjustments:
        
Pension expense
     2,638  
Profit sharing expense
     1,560  
Vitro corporate tax
     1,286  
Rent expense
     470  
Other
     (36 )
 
        
 
      
Total Crisa pro forma adjustments
     5,918  
 
        
 
      
Crisa adjusted pro forma EBIT
     20,094  
 
        
Depreciation & amortization
     10,970  
 
      
 
        
Crisa adjusted pro forma earnings before interest tax depreciation and amortization (EBITDA)
   $ 31,064  
 
      
 
        
Net sales adjustments and eliminations
     (32,554 )
 
        
Libbey consolidated
        
Pro forma net sales
   $ 763,553  
 
      
 
        
Pro forma adjusted EBIT
   $ 48,283  
 
      
 
        
Pro forma adjusted EBITDA
   $ 90,089  
 
      

 

 

Table 7
Summary Business Segment information
(Dollars in thousands)
                                 
    Three months ended Dec. 31,     Twelve months ended Dec. 31,  
    2007     2006     2007     2006  
Net sales:
                                
North American Glass
   $ 155,823     $ 156,027     $ 568,495     $ 476,696  
North American Other
     33,882       31,200       121,217       114,581  
International
     38,926       29,509       136,727       106,798  
Eliminations
     (3,521 )     (3,375 )     (12,279 )     (8,595 )
 
                        
Consolidated net sales
   $ 225,110     $ 213,361     $ 814,160     $ 689,480  
 
                        
 
                                
Earnings (loss) before interest & taxes (EBIT):(1)
                                
North American Glass
   $ 15,690     $ 3,821     $ 54,492     $ 5,471  
North American Other
     4,377       4,560       15,670       9,382  
International
     5,185       103       4,717       3,161  
 
                        
Consolidated EBIT
   $ 25,252     $ 8,484     $ 74,879     $ 18,014  
 
                        
 
                                
Depreciation & Amortization:
                                
North American Glass
   $ 5,717     $ 5,097     $ 25,558     $ 22,102  
North American Other
     736       916       3,328       3,450  
International
     3,408       2,495       12,686       10,168  
 
                        
Consolidated depreciation & amortization
   $ 9,861     $ 8,508     $ 41,572     $ 35,720  
 
                        
 
                                
Reconciliation of EBIT to Net loss:
                                
Segment EBIT
   $ 25,252     $ 8,484     $ 74,879     $ 18,014  
Interest Expense
     (16,939 )     (17,234 )     (65,888 )     (46,594 )
Income Taxes
     (13,267 )     212       (11,298 )     7,747  
Minority Interest
     —       —       —       (66 )
 
                        
Net loss
   $ (4,954 )   $ (8,538 )   $ (2,307 )   $ (20,899 )
 
                        
 
                                
 
(1) EBIT includes the following special charges:
                                
North American Glass
   $ —     $ 3,404     $ —     $ 18,534  
North American Other
     —       (42 )     —       (42 )
International
     —       —       —       —  
 
                        
Consolidated special charges
   $ —     $ 3,362     $ —     $ 18,492  
 
                        
Note:
North American Glass—includes sales of glass tableware from subsidiaries throughout the United States, Canada and Mexico.
North American Other—includes sales of ceramic dinnerware, metal tableware, holloware and serveware and plastic items.
International—includes worldwide sales of glass tableware from subsidiaries outside the United States, Canada and Mexico.