Libbey Inc. Announces Third Quarter Results

10/25/2006
  • Sales Increase 35.2 Percent


  • Reported Net Loss of $3.3 Million, or $0.23 Per Share


  • Year-to-Date Cash Flow From Operations Increase 147.3 Percent


  • Adjusted EBITDA of $20.2 Million, $.7 Million Better Than Upper End of Guidance

TOLEDO, Ohio, Oct. 26 /PRNewswire-FirstCall/ -- Libbey Inc. (NYSE: LBY) announced today that sales increased 35.2 percent to $183.3 million from $135.6 million in the prior year third quarter. Libbey reported a net loss of $3.3 million, or $0.23 per share, for the third quarter ended September 30, 2006, as compared with net income of $4.2 million, or $0.30 per share in the prior year quarter.

Third Quarter Results

For the quarter-ended September 30, 2006, sales increased 35.2 percent to $183.3 million from $135.6 million in the year-ago quarter. The increase in sales was primarily attributable to the consolidation of the sales of Crisa, the Company's former joint venture in Mexico, a more than 10 percent increase in shipments to retail, Royal Leerdam and Crisal glassware customers and World Tableware products, and increases of more than 3.5 percent in shipments of Traex and Syracuse China products. Shipments to foodservice glassware customers were down slightly as the installation of a new warehouse management software system in Toledo resulted in missed shipments of approximately $3 million of foodservice glassware. On a pro-forma basis giving effect to the consolidation of Crisa, as detailed in the attached Table 4, sales were up 4.4 percent in total.

The Company reported income from operations of $10.8 million during the quarter, as compared to income from operations of $10.0 million in the year- ago quarter. Income from operations, excluding special charges (see Table 1), was $10.5 million during the year-ago quarter (see Table 2). Factors contributing to the increase in income from operations were the consolidation of Crisa, higher sales, and higher production activity. Partially offsetting these improvements were an unfavorable mix of sales amounting to $2.5 million, driven by a reduction in foodservice sales and the impact of Crisal close-out sales, higher distribution costs of $1.6 million, primarily related to the increased sales, and $0.5 million in increased pension and postretirement welfare expenses.

Libbey reported that adjusted EBITDA, as detailed on Table 3, increased to $20.2 million in the third quarter of 2006 as compared to $19.1 million in the year-ago quarter. The additional EBITDA provided by Crisa was partially offset by an increase of almost $2.2 million in charges related to hedge accounting for natural gas contracts.

Interest expense increased $12.2 million compared with the year-ago period as a result of the refinancing consummated on June 16, 2006, which resulted in higher debt and higher average interest rates.

The effective tax rate increased to 48.3 percent for the quarter. This increase was driven by the new annual effective tax rate of 38 percent as the result of the Crisa acquisition and related refinancing. Libbey reported its net loss was $3.3 million, or $0.23 per diluted share, compared with diluted earnings per share of $0.30 in the third quarter of 2005. The Company reported diluted earnings per share for the third quarter of 2005 of $0.32, as detailed in the attached Table 2, and excluding pretax special charges of $0.5 million relating to the impact of capacity realignment charges associated with the shutdown of Libbey's City of Industry, California, facility in February 2005, as detailed in the attached Table 1.

Nine-Month Results

For the nine months ended September 30, 2006, sales increased 16.2 percent to $476.1 million from $409.9 million in the year-ago period. The increase in sales was primarily attributable to the consolidation of the sales of Crisa and increases of more than 6 percent in shipments to foodservice glassware customers, retail customers, Traex customers, Royal Leerdam customers and Crisal customers. Sales of World Tableware products increased 5 percent as compared to the first nine months of 2005. Shipments to industrial customers were down almost 7 percent during the first nine months of 2006, while shipments of Syracuse China products were down slightly. On a pro-forma basis, giving effect to the consolidation of Crisa, as detailed in the attached Table 4, sales were up 4.2 percent in total.

Libbey reported income from operations of $9.8 million during the first nine months of 2006 as compared to income from operations of $12.6 million during the year-ago period. Adjusted income from operations, excluding special charges (see Table 2), was $24.9 million for the first nine months of 2006, as compared to $22.5 million for the year-ago period. Primary contributors to the increase in adjusted income from operations were the consolidation of Crisa, higher sales and higher production activity.

Equity earnings from Crisa, which were included from January 1, 2006 through June 15, 2006, were $2.0 million on a pretax basis, as compared to a pretax loss of $1.4 million in the first nine months of 2005. The increased equity earnings were the result of increased and more profitable sales, higher translation gain, and lower natural gas and electricity costs.

For the first nine months of 2006, adjusted EBITDA, as detailed on Table 3, was $51.6 million, a 7.5 percent increase over adjusted EBITDA of $48.0 million during the first nine months of 2005. The additional EBITDA provided by Crisa was partially offset by $3.1 million increase in charges related to hedge accounting for natural gas contracts.

Interest expense increased $19.1 million compared with the year-ago period as a result of the refinancing completed on June 16, 2006. Contributing to the increase in interest expense were higher debt and higher average interest rates.

The Company recorded a net loss of $12.4 million, or $0.87 per diluted share, compared with net income of $1.6 million, or $0.12 per diluted share, in the year-ago period. The Company reported that its diluted earnings per share for the first nine months of 2006, as detailed in the attached Table 2, and excluding special charges of $15.1 million pretax relating to the announced consolidation of two of its recently acquired Mexican facilities and the write-off of $4.9 million pretax of finance fees outlined in the attached Table 1, were $0.00 per diluted share. This compares to diluted earnings per share of $0.60 during the first nine months of 2005, excluding the impact of special charges relating to the 2005 salary reduction program and the capacity realignment charges associated with the shutdown of Libbey's City of Industry, California, facility in February 2005, as detailed in the attached Table 1.

Cash Flow

Year-to-date cash flow from operations increased $18.8 million, or 147.3 percent, to $31.5 million as compared to the year-ago period. Contributing to the increase in operating cash flow were higher non-cash special charges and a reduction in working capital.

Working capital, defined as inventories and accounts receivable less accounts payable, increased by $29.6 million from $169.4 million to $199.0 million compared to September 30, 2005, due to the acquisition of Crisa. Excluding working capital of $46.0 million at Crisa at September 30, 2006, the Company's working capital was $16.4 million lower than the year-ago period, reflecting the Company's continued efforts to reduce its investment in working capital.

Pro Forma Results

Libbey reported that pro forma adjusted EBITDA as detailed on Table 4 was $20.2 million in the third quarter of 2006 as compared to $26.2 million in the year-ago quarter as the result of an unfavorable mix of sales, driven by a reduction in foodservice sales and the impact of Crisal close-out sales and the expenses and reduced activity associated with the capacity realignment at Crisa in Mexico. For the first nine months of 2006, pro forma adjusted EBITDA, as detailed on Table 4, was $69.7 million as compared to pro forma adjusted EBITDA of $71.0 million during the first nine months of 2005, largely impacted by a $3.1 million increase in charges related to hedge accounting for natural gas contracts, Crisal close-out sales and the capacity realignment in Mexico.

Recent Developments

Libbey announced that an agreement has been reached with Vista Allegre Atlantis SGPS, SA (VAA) to acquire the remaining 5 percent of Crisal that it does not currently own for 1 euro. The agreement eliminates the previously anticipated payment of 2 million euros for the remaining 5 percent of shares of Crisal and also waives an earn-out contingency of 5.5 million euros, which was expected to be paid in 2008.

Libbey also announced that it entered into interest rate protection agreements during the third quarter with respect to $200 million of debt as a means to manage its exposure to fluctuating interest rates. These rate agreements effectively convert $200 million of our $306 million of senior notes from variable rate debt to fixed rate debt at 12.24 percent through December 2009.

Libbey has determined that the recently enacted Pension Protection Act of 2006 is expected to favorably impact projected 2007 cash flow by approximately $17 million. Libbey had originally projected cash contributions of approximately $35 million to cover 2007 pension and retiree welfare funding requirements. These contributions are now expected to be approximately $18 million.

Outlook for 2006

John F. Meier, chairman and chief executive officer, commenting on the quarter said, "We are pleased with the strength of our core business performance. While we experienced a small decline in foodservice glassware shipments as a result of the installation of our new warehouse management software in Toledo, our sales of other products to foodservice customers increased nicely. Sales to European glassware customers were strong and shipments to retail customers were especially robust. Crisa, our recently acquired Mexican glass tableware operation, contributed as planned during the consolidation of the facilities in Mexico, and we look forward to harvesting those future savings in 2007." He added, "We expect fourth quarter sales to increase by 3 to 4 percent as compared with the pro-forma fourth quarter sales in 2005. We are encouraged by our expectations for increased sales in all channels of distribution in the United States during the fourth quarter of 2006. Earnings before interest, taxes, depreciation and amortization (EBITDA) are expected to be between $18.5 million and $19.5 million in the fourth quarter of 2006."

Libbey also confirmed that it is on schedule to begin production in early 2007 at its new glass tableware production facility in China.

Webcast Information

Libbey will hold a conference call for investors on Thursday, October 26, 2006, at 11 a.m. Eastern Daylight Time. The conference call will be simulcast live on the Internet on both http://www.libbey.com and http://phx.corporate- ir.net/phoenix.zhtml?p=irol-eventDetails&c=64169&eventID=1401164 . 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, 2006, and Form 10-Q filed with the Commission on August 9, 2006. Important factors potentially affecting performance include but are not limited to increased competition from foreign suppliers endeavoring to sell glass tableware in the United States and Mexico, including the impact of lower duties for imported products; major slowdowns in the retail, travel or entertainment industries in the United States, Canada, Mexico and Western Europe, caused by terrorist attacks or otherwise; significant increases in per unit costs for natural gas, electricity, corrugated packaging, and other purchased materials; higher 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; whether the Company completes any significant acquisition, and whether such acquisitions can operate profitably. With respect to its expectations regarding the recent Crisa acquisition, these factors also include, the ability to successfully integrate the operations of Crisa and recognize the expected synergies and the ability of Vitro to supply necessary services to Crisa, and our ability to capitalize on the expanded platform that the acquisition of Crisa will provide.

    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 Mexico, the
        Netherlands, Portugal, and a facility in China that is expected to
        begin production in 2007;
    --  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 90 countries.

Based in Toledo, Ohio, the Company operates glass tableware manufacturing plants in the United States in Louisiana and Ohio, as well as in Mexico, 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 2005, Libbey Inc.'s net sales totaled $568.1 million.

                                   LIBBEY INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (Dollars in thousands, except per-share amounts)
                                   (unaudited)


                                                    THREE MONTHS ENDED
                                               September 30,     September 30,
                                                    2006              2005

    Net sales                                     $183,256          $135,573

    Freight billed to customers                      1,004               444

    Total revenues                                 184,260           136,017

    Cost of sales                                  152,692           108,750

    Gross profit                                    31,568            27,267

    Selling, general and administrative
     expenses                                       20,729            16,788

    Special charges (1)                                -                 487

    Income from operations                          10,839             9,992

    Equity loss -- pretax                              -              (1,183)

    Other (loss) income                             (1,733)              923

    Earnings before interest, income
     taxes and minority interest                     9,106             9,732

    Interest expense                                15,551             3,398

    (Loss) income before income taxes and
     minority interest                              (6,445)            6,334

    (Credit) provision for income taxes             (3,116)            2,090

    (Loss) income before minority
     interest                                       (3,329)            4,244

    Minority interest                                   22               (77)

    Net (loss) income                              $(3,307)           $4,167

    Net (loss) income per share:
    Basic                                           $(0.23)            $0.30
    Diluted                                         $(0.23)            $0.30

    Weighted average shares:
    Outstanding                                     14,254            13,948
    Diluted                                         14,254            13,951

    (1) Refer to Table 1 for special charges detail.



                                   LIBBEY INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (Dollars in thousands, except per-share amounts)
                                   (unaudited)


                                                     NINE MONTHS ENDED
                                                September 30,    September 30,
                                                   2006 (2)           2005

    Net sales                                     $476,120          $409,895

    Freight billed to customers                      2,387             1,422

    Total revenues                                 478,507           411,317

    Cost of sales (1)                              396,621           335,955

    Gross profit                                    81,886            75,362

    Selling, general and administrative
     expenses (1)                                   59,511            55,109

    Special charges (1)                             12,587             7,681

    Income from operations                           9,788            12,572

    Equity earnings (loss)  -- pretax                1,986            (1,381)

    Other (loss) income                             (2,244)            1,655

    Earnings before interest, income
     taxes and minority interest                     9,530            12,846

    Interest expense (1)                            29,360            10,240

    (Loss) income before income taxes and
     minority interest                             (19,830)            2,606

    (Credit) provision for income taxes             (7,535)              860

    (Loss) income before minority
     interest                                      (12,295)            1,746

    Minority interest                                  (66)              (98)

    Net (loss) income                             $(12,361)           $1,648

    Net (loss) income per share:
    Basic                                           $(0.87)            $0.12
    Diluted                                         $(0.87)            $0.12

    Weighted average shares:
    Outstanding                                     14,139            13,879
    Diluted                                         14,139            13,880

    (1) Refer to Table 1 for special charges detail.
    (2) Crisa results for January 1, 2006 through June 15, 2006 are reflected
        in equity earnings.  Crisa results for June 16, 2006 through September
        30, 2006 are included in the consolidated statement of operations
        above.



                                   LIBBEY INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                              (Dollars in thousands)

                                      September    June    December  September
                                      30, 2006   30, 2006  31, 2005  30, 2005
                                    (unaudited) (unaudited)        (unaudited)
                                          (1)      (1,2)

    ASSETS

    Cash                                $37,804   $26,661    $3,242    $1,242

    Accounts receivable - net           104,708   103,849    79,042    75,122

    Inventories - net                   167,859   161,827   122,572   147,848

    Deferred taxes                        3,529     3,339     8,270     8,847

    Other current assets                 14,075     6,199    10,787    18,660

    Total current assets                327,975   301,875   223,913   251,719

    Other assets                         55,058    54,213    33,483    40,015

    Investments                             -                76,657    81,271

    Goodwill and purchased intangibles
     - net                              196,755   200,624    61,603    70,857

    Property, plant and equipment -
     net                                309,777   295,153   200,128   204,608

    Total assets                       $889,565  $851,865  $595,784  $648,470

    LIABILITIES AND SHAREHOLDERS'
     EQUITY

    Notes payable                          $422    $1,546   $11,475   $15,748

    Accounts payable                     73,559    59,447    47,020    53,551

    Accrued liabilities                  72,934    62,666    53,011    40,413

    Deposit liability                       -         -         -      16,623

    Special charges reserve               3,509     3,508     2,002     3,029

    Other current liabilities             4,374     7,746     7,131     7,650

    Long-term debt due within one year      825       825       825   243,857

    Total current liabilities           155,623   135,738   121,464   380,871

    Long-term debt                      484,035   462,774   249,379     5,829

    Deferred taxes                          -         -         -      13,252

    Pension liability                    78,061    73,994    54,760    43,741

    Nonpension postretirement benefits   43,673    44,533    45,081    45,882

    Other liabilities                    23,769    26,352     5,461     6,628
    Total liabilities                   785,161   743,391   476,145   496,203

    Minority interest                       100       129        34        98

    Total liabilities and minority
     interest                           785,261   743,520   476,179   496,301

    Total shareholders' equity          104,304   108,345   119,605   152,169

    Total liabilities and
     shareholders' equity              $889,565  $851,865  $595,784  $648,470

    (1)  Crisa balances are consolidated in September 30, 2006 and June 30,
         2006 balances.
    (2)  Certain amounts have been reclassified to conform to the presentation
         used in the September 30, 2006 balance sheet above.



                                   LIBBEY INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (unaudited)

                                                     THREE MONTHS ENDED
                                                September 31,    September 30,
                                                     2006            2005

    Operating activities

    Net (loss) income                              $(3,307)         $4,167

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

    Depreciation and amortization                   10,671           9,160

    Equity loss  - net of tax                          -               791

    Change in accounts receivable                   (2,624)         (2,685)

    Change in inventories                           (5,600)        (11,773)

    Change in accounts payable                      17,373          11,516

    Special charges                                    (65)         (2,356)

    Pension & nonpension postretirement              3,225           1,517

    Other operating activities                      (8,524)         (9,082)

    Net cash provided by operating
     activities                                     11,149           1,255


    Investing activities

    Additions to property, plant and
     equipment                                     (20,301)         (7,389)

    Business acquisition and related
     costs - net of cash acquired                     (424)            -

    Other                                              -               223

    Net cash used in investing activities          (20,725)         (7,166)


    Financing activities

    Net borrowings                                  21,036           6,544

    Debt financing fees                             (1,112)            -

    Dividends                                         (356)         (1,394)

    Other                                            1,078            (537)

    Net cash provided by financing
     activities                                     20,646           4,613

    Effect of exchange rate fluctuations
     on cash                                            73             -

    Increase (decrease) in cash                     11,143          (1,298)

    Cash at beginning of period                     26,661           2,540

    Cash at end of period                          $37,804          $1,242



                                   LIBBEY INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (Dollars in thousands)
                                   (unaudited)


                                                      NINE MONTHS ENDED
                                                September 30,    September 30,
                                                     2006             2005

    Operating activities

    Net (loss) income                              $(12,361)         $1,648

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

    Depreciation and amortization                    27,212          25,611

    Equity (earnings) loss  - net of tax             (1,378)            967

    Change in accounts receivable                     1,892          (4,382)

    Change in inventories                            (2,678)        (16,284)

    Change in accounts payable                        2,061           3,630

    Special charges                                  18,859           1,156

    Pension & nonpension postretirement               9,428           4,538

    Other operating activities                      (11,511)         (4,138)

    Net cash provided by operating
     activities                                      31,524          12,746


    Investing activities

    Additions to property, plant and
     equipment                                      (54,557)        (26,503)

    Business acquisition and related
     costs - net of cash acquired                   (77,995)        (28,990)

    Other                                               -               223

    Net cash used in investing activities          (132,552)        (55,270)


    Financing activities

    Net borrowings                                  150,666          42,137

    Debt financing fees                             (15,468)            -

    Dividends                                        (1,059)         (4,162)

    Other                                             1,273            (453)

    Net cash provided by financing
     activities                                     135,412          37,522

    Effect of exchange rate fluctuations
     on cash                                            178             -

    Increase (decrease) in cash                      34,562          (5,002)

    Cash at beginning of period                       3,242           6,244

    Cash at end of period                           $37,804          $1,242



    Table 1
    Summary of Special Charges
    (Dollars in thousands)

                                        Three Months ended  Nine Months ended
                                           September 30,      September 30,
                                           2006    2005      2006       2005

    Capacity realignment:
    Fixed asset related                     $-      $130       $-        $650
    Employee termination costs & other       -       357        -       3,681
    Included in Special charges             $-      $487       $-      $4,331


    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. Libbey has recorded a pretax charge of $487 in
    the third quarter 2005 and $4,331 year-to-date 2005, as detailed above.


    Salary reduction program:
    Pension & retiree welfare               $-      $-         $-        $867
    Included in Cost of sales                -       -          -         867

    Pension & retiree welfare                -       -          -       1,347
    Included in Selling, general and
     administrative expenses                 -       -          -       1,347

    Employee termination costs & other       -       -          -       3,350
    Included in Special charges              -       -          -       3,350

    Pretax salary reduction program         $-      $-         $-      $5,564


    In June 2005, Libbey reduced its North American salaried workforce by ten
    percent in order to improve its overall cost profile.  The pretax charge
    for the salary reduction was $5,564 year-to-date 2005 as detailed above.


    Crisa Restructuring:
    Inventory write-down                    $-      $-       $2,543      $-
    Included in Cost of sales                -       -        2,543       -

    Fixed asset related                      -       -       12,587       -
    Included in Special charges              -       -       12,587       -

    Crisa Restructuring                     $-      $-      $15,130      $-


    In June 2006, Libbey announced plans to consolidate Crisa's two principal
    manufacturing facilities.  Libbey has recorded a pretax charge of $15,130
    year-to-date 2006 as detailed above.


    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                   $-      $487    $20,036    $9,895


    Special charges classifications as shown in the Condensed Consolidated
    Statement of Operations:

    Cost of sales                           $-      $-       $2,543      $867
    Selling, general and administrative
     expenses                                        -          -       1,347
    Special charges                          -       487     12,587     7,681
    Interest expense                         -       -        4,906       -
    Total special charges                   $-      $487    $20,036    $9,895



    In accordance with the SEC's Regulation G, the following tables 2, 3 and 4
    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, except per-share amounts)

                                         Three months ended  Nine months ended
                                            September 30,      September 30,
                                            2006     2005      2006     2005

    Reported income from operations       $10,839   $9,992    $9,788  $12,572

    Special charges (excluding write-off
     of finance fees) - pre-tax               -        487    15,130    9,895

    Adjusted income from operations       $10,839  $10,479   $24,918  $22,467



    Reported net (loss) income            $(3,307)  $4,167  $(12,361)  $1,648

    Special charges - net of tax              -        326    12,422    6,630

    Adjusted net (loss) income            $(3,307)  $4,493       $61   $8,278


    Diluted (loss) income per share:

    Reported net (loss) income             $(0.23)   $0.30    $(0.87)   $0.12

    Special charges - net of tax              -       0.02      0.87     0.48

    Adjusted net (loss) income per
     diluted share                         $(0.23)   $0.32     $0.00    $0.60



    Table 3
    Reconciliation of Net Income to EBITDA and Adjusted EBITDA
    (Dollars in thousands)

                                                       Three months ended
                                                          September 30,
                                                      2006              2005

    Reported net (loss) income                      $(3,307)           $4,167

    Add:
    Interest expense                                 15,551             3,398
    (Credit) provision for income taxes              (3,116)            2,090
    Depreciation and amortization
     (adjusted for minority interest)                11,060             8,943
    EBITDA                                          $20,188           $18,598

    Add:
    Special charges                                     -                 487
    Adjusted EBITDA                                 $20,188           $19,085



                                                        Nine months ended
                                                          September 30,
                                                      2006              2005

    Reported net (loss) income                     $(12,361)           $1,648

    Add:
    Interest expense                                 29,360            10,240
    (Credit) provision for income taxes              (7,535)              860
    Depreciation and amortization
     (adjusted for minority interest)                27,048            25,394
    EBITDA                                          $36,512           $38,142

    Add:
    Special charges                                  15,130             9,895
    Adjusted EBITDA                                 $51,642           $48,037



    Table 4
    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 and 2005.


                                       Three months ended   Nine months ended
                                            Sept 30,             Sept 30,
                                       2006 (1)    2005       2006      2005
    Libbey
    Net sales                          $143,970  $135,573  $428,254  $409,895

    Earnings before interest and tax
     (EBIT)                               6,995     9,732    21,641    12,846

    Add: special charges                    -         487       -       9,895

     Less: minority interest (5% for
      Crisal)                                22       (77)      (66)      (96)

     Adjusted EBIT                        7,017    10,142    21,575    22,645

    Pro forma adjustments:
    Equity (earnings) loss                  -       1,183    (1,986)    1,381

    Libbey adjusted pro forma EBIT        7,017    11,325    19,589    24,026

    Depreciation & amortization
     (adjusted for minority interest)     7,902     8,943    23,890    25,394

    Libbey adjusted pro forma earnings
     before interest tax depreciation
     and amortization (EBITDA)          $14,919   $20,268   $43,479   $49,420

    Crisa
    Net sales                           $49,399   $47,735  $145,625  $141,471

    Earnings / (loss) before interest
     and tax (EBIT)                       2,111       292    (4,200)    3,399

    Add: special charges                    -         -      15,130       -

     Adjusted EBIT                        2,111       292    10,930     3,399

    Pro forma adjustments:
    Pension expense                         -         945     2,638     2,835
    Profit sharing expense                  -         844     1,560     2,712
    Vitro corporate tax                     -         681     1,286     1,911
    Rent expense                            -         235       470       705
    Other                                   -         292       (36)      188

    Total Crisa pro forma adjustments       -       2,997     5,918     8,351

    Crisa adjusted pro forma EBIT         2,111     3,289    16,848    11,750

    Depreciation & amortization           3,158     2,594     9,408     9,830

    Crisa adjusted pro forma earnings
     before interest tax depreciation
     and amortization (EBITDA)           $5,269    $5,883   $26,256   $21,580

    Net sales adjustments and
     eliminations                       (10,113)   (7,713)  (23,687)  (23,323)

    Libbey consolidated
    Pro forma net sales                $183,256  $175,595  $550,192  $528,043

    Pro forma adjusted EBIT              $9,128   $14,614   $36,437   $35,776

    Pro forma adjusted EBITDA           $20,188   $26,151   $69,735   $71,000

    (1) Reflects actual results.

SOURCE: Libbey Inc.

CONTACT: Kenneth Boerger, VP-Treasurer, +1-419-325-2279, or Scott Sellick, VP-Chief Financial Officer, +1-419-325-2135, both of Libbey Inc.

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