Libbey Inc. Announces Second Quarter 2011 Results

07/28/2011

TOLEDO, Ohio, July 28, 2011 /PRNewswire via COMTEX/ --

  • Second Quarter Net Sales of $214.0 Million, an Increase of 5.4 Percent Compared to $203.0 Million in the Prior-Year Quarter
  • Glass Operations Sales Increase 7.6 Percent
  • Sale of Traex for $12.8 Million Completed in April 2011, Resulting in a Gain of $3.3 Million
  • Income From Operations of $24.7 Million in the Second Quarter of 2011 Compared to Income From Operations of $23.2 Million in the Prior-Year Quarter
  • Net Income of $0.74 Per Diluted Share in the Second Quarter of 2011 Compared to $0.47 Per Diluted Share in the Prior-Year Quarter

Libbey Inc. (NYSE Amex: LBY) announced today that sales for the second quarter of 2011 were $214.0 million, compared to $203.0 million in the second quarter of 2010, an improvement of 5.4 percent. Libbey reported net income of $15.4 million, or $0.74 per diluted share, for the second quarter ended June 30, 2011, compared to net income of $9.6 million, or $0.47 per diluted share, in the prior-year quarter. Excluding special items of $4.9 million in income in the second quarter of 2011 and $1.9 million in expense in the second quarter of 2010, Libbey had net income of $10.5 million (see Table 1) and diluted earnings per share of $0.50 during the second quarter of 2011, compared to net income of $11.5 million and diluted earnings per share of $0.56 for the second quarter of 2010. The special items during the second quarter of 2011 included a $3.3 million gain on the sale of Traex. The special items in the second quarter of 2010 included a write-down of certain after-processing equipment within the Company's Glass Operations segment.

Second Quarter Results

For the quarter-ended June 30, 2011, net sales increased 5.4 percent to $214.0 million, compared to $203.0 million in the year-ago quarter. Sales in the Glass Operations segment were $194.5 million, an increase of 7.6 percent (3.6 percent excluding the impact of currency on sales), compared to $180.8 million in the second quarter of 2010 (see Table 5). Primary contributors to the increased sales were a 58.5 percent increase in sales within our China sales region (51.0 percent excluding currency impact), a 28.6 percent increase in sales within our European sales region (13.9 percent excluding the impact of currency), and a 10.6 percent increase in sales within our International sales region (7.5 percent excluding currency impact) compared to the prior-year quarter. Sales within our Mexico sales region increased 5.5 percent (excluding the currency impact net sales were flat.) Sales to U.S. and Canadian foodservice glassware customers increased 1.3 percent, as shipments to foodservice customers were strong in May and June following a weak April. Sales to U.S. and Canadian retail customers decreased 3.8 percent during the second quarter of 2011, compared to an extremely strong second quarter of 2010 when retail sales grew 13.5 percent. Sales in the Other Operations segment were $19.7 million, compared to $22.4 million in the prior-year quarter. As a result of the sale of Traex in late April, sales of Traex products were lower by $3.1 million versus the prior year, accounting for more than the total $2.7 million decrease in sales for Other Operations. In addition, sales to World Tableware customers decreased 2.7 percent during the quarter while sales to Syracuse China customers increased 16.8 percent.

The Company reported income from operations of $24.7 million during the quarter, compared to income from operations of $23.2 million in the year-ago quarter. Income from operations, excluding special items (see Table 1), was $24.3 million in the second quarter of 2011, compared to $25.1 million during the second quarter of 2010. Lost production in Mexico due to a short-term raw material issue, combined with lost production in Holland due to minor flooding, negatively impacted income from operations excluding special items during the second quarter by approximately $1.0 million. Both situations have been resolved.

Libbey reported earnings before interest and taxes (EBIT) of $27.8 million, compared to EBIT of $24.8 million in the year-ago quarter. The improved EBIT was primarily a result of the $3.3 million gain on the sale of Traex discussed above. EBIT, excluding special items (see Table 1), was $23.8 million in the second quarter of 2011, compared to $26.7 million during the second quarter of 2010. Segment EBIT (see Table 5) was $30.0 million for Glass Operations, compared to segment EBIT of $31.2 million in the year-ago quarter. A reduction of $2.1 million in other income (excluding special items) was primarily the translation impact of Libbey Mexico's net peso-denominated liability position. Other Operations reported segment EBIT for the second quarter of 2011 of $3.8 million, compared to $4.8 million in the year-ago quarter.

Libbey reported that Adjusted EBITDA (see Table 3) was $34.8 million in the second quarter of 2011, compared to $37.3 million (an all-time record) in the second quarter of 2010. The second quarter of 2010 included EBITDA related to Traex of $0.8 million, compared to only $0.2 million for the month of April in 2011.

Interest expense decreased by $1.0 million to $10.8 million, compared to $11.8 million in the year-ago period, as a result of the impact of the $40 million debt repayment completed in March 2011.

The effective tax rate decreased to 9.3 percent for the quarter-ended June 30, 2011, compared to 26.7 percent for the quarter-ended June 30, 2010. The effective tax rate was influenced by valuation allowances and changes in the mix of earnings with differing statutory rates.

Libbey reported net income of $15.4 million, or $0.74 per diluted share, for the second quarter ended June 30, 2011, compared to net income of $9.6 million, or $0.47 per diluted share, in the prior-year quarter. Excluding special items of $4.9 million in income in the second quarter of 2011 and $1.9 million in expense in the second quarter of 2010, Libbey had net income of $10.5 million (see Table 1) and diluted earnings per share of $0.50 during the second quarter of 2011, compared to net income of $11.5 million and diluted earnings per share of $0.56 for the second quarter of 2010. The special items during the second quarter of 2011 included, among other items, a $3.3 million gain on the sale of Traex. The special items in the second quarter of 2010 included a write-down of certain after-processing equipment within the Company's Glass Operations segment.

Six-Month Results

For the six months ended June 30, 2011, sales increased 4.8 percent to $395.0 million, compared to $376.9 million in the first half of 2010. Excluding the impact of currency, sales increased 2.6 percent. Sales in the Glass Operations segment were $356.5 million, an increase of 6.1 percent (3.7 percent excluding the impact of currency on sales), compared to $336.0 million in the first six months of 2010 (see Table 5). Primary contributors to the increased sales were a 69.3 percent increase in sales within our China sales region (62.3 percent excluding currency impact), a 14.4 percent increase in sales within our European sales region (7.8 percent excluding the impact of currency), and a 17.9 percent increase in sales within our International sales region (15.9 percent excluding currency impact) compared to the prior-year first six months. Sales within our Mexico region were flat (excluding the currency impact sales decreased 4.7 percent.) Sales to U.S. and Canadian foodservice glassware customers increased 1.1 percent. Sales to U.S. and Canadian retail customers also increased 1.1 percent during the first half of 2011, compared to the first half of 2010. Sales to U.S. and Canadian business to business customers increased 7.7 percent during the first six months of 2011, compared to the first six months of 2010. Sales in the Other Operations segment were $38.9 million, compared to $41.3 million in the prior-year, reflecting the late April disposition of Traex. Sales of Syracuse China products increased 5.9 percent and sales to World Tableware customers increased 1.5 percent. Sales of Traex products were lower by $3.3 million versus the prior year, as the result of the sale in late April, and accounted for more than the total $2.4 million decrease in sales for Other Operations.

The Company reported income from operations of $35.4 million during the first six months of 2011, compared to income from operations of $34.0 million in the year-ago period. Adjusted income from operations was $35.0 million for the first half of 2011, compared to $36.1 million in 2010 (see Table 2). Factors contributing to the slight decrease in adjusted income from operations were higher sales, which were more than offset by the impact of lost production in Libbey Mexico and Libbey Holland during the second quarter and increased selling, general and administrative expenses.

EBIT was $38.7 million in the first six months of 2011, compared to $91.7 million in the first six months of 2010. Adjusted EBIT for the first six months of 2011, as detailed in Table 2, was $34.1 million, compared to Adjusted EBIT of $37.1 million in the first six months of 2010. Segment EBIT for the Glass Operations segment was $47.4 million during the first half of 2011, compared to segment EBIT of $46.6 million in the first six months of 2010. The increase is the result of increased sales partially offset by the negative translation impact of the net peso-denominated liability in Mexico. The Other Operations segment reported EBIT for the first half of 2011 of $6.6 million, compared to $8.2 million in the year-ago period, with the decrease being the result of higher costs and the sale of Traex in April 2011.

The special items in the first six months of 2010 included a gain of $70.2 million, which represented the difference between the carrying value and the face value of the Payment in Kind (PIK) notes that were redeemed in February 2010. This gain was partially offset by the write-off of $13.4 million of unamortized fees and discounts on the refinanced floating rate senior notes and Asset Backed Loan (ABL) credit facility and call premium payments.

Libbey reported that Adjusted EBITDA, as detailed in Table 3, was $56.0 million in the first six months of 2011, compared to Adjusted EBITDA of $58.1 million in the year-ago six-month period.

Interest expense increased by $1.0 million in the first six months of 2011 to $22.4 million, compared to $21.4 million in the year-ago period. The increase in interest expense was primarily attributable to the fact that a portion of the Company's debt carried a low effective interest rate in January 2010, prior to the debt refinancing completed in February 2010. Lower debt levels in 2011 partially offset the change in interest rates.

The effective tax rate was 11.6 percent for the first six months of 2011, compared to 7.5 percent for the first six months of 2010. The effective tax rate was influenced by valuation allowances and changes in the mix of earnings with differing statutory rates.

Libbey reported net income of $14.4 million for the first six months of 2011, or $0.69 per diluted share, compared to net income of $65.0 million, or $3.21 per diluted share, in the first half of 2010. Excluding special items of $4.6 million, Libbey had net income of $9.8 million (see Table 2) and diluted earnings per share of $0.47 for the first half of 2011, compared to net income of $10.4 million, or diluted earnings per share of $0.52 in the first half of 2010. The significant special items in the first six months of 2011 included the $3.3 million gain on the sale of the Traex business and a $3.4 million gain on the sale of land at Royal Leerdam. The special items in the first six months of 2010 included a gain of $70.2 million, which represented the difference between the carrying value and the face value of the PIK notes that were redeemed in February 2010. This gain was partially offset by the write-off of $13.4 million of unamortized fees and discounts on the refinanced floating rate senior notes and ABL credit facility and call premium payments. Also included was a write-down of certain after-processing equipment within the Company's Glass Operations segment.

Working Capital and Liquidity

As of June 30, 2011, working capital, defined as inventories and accounts receivable less accounts payable, was $204.3 million, compared to $193.5 million at June 30, 2010. Excluding the $10.4 million currency impact, the year-over-year change in working capital was $0.4 million. Working capital as a percentage of net sales was 25.2 percent at June 30, 2011, compared to 25.1 percent at June 30, 2010.

Adjusted free cash flow, as detailed in the attached Table 4, was $33.5 million for the second quarter of 2011, compared to $30.9 million in the second quarter of 2010. Adjusted free cash flow was $6.5 million in the first half of 2011, compared to $10.0 million in the first six months of 2010, after adjusting for the payment of interest on the PIK notes.

Libbey reported that it had available capacity of $69.3 million under its ABL credit facility as of June 30, 2011, with $2.2 million in loans currently outstanding. The Company also had cash on hand of $44.3 million at June 30, 2011.

Solid Improvement in Glass Operations Segment

John F. Meier, chairman and chief executive officer said, "We were pleased with the solid sales improvements we saw in the Glass Operations segment in the second quarter. Sales in China and Europe were particularly strong, and we were encouraged by the improved performance of the U.S. foodservice business in May and June. Adjusted EBITDA results were also solid, considering we had an all-time record Adjusted EBITDA in the second quarter of 2010, and the second quarter of 2011 only included one month of results from Traex."

Webcast Information

Libbey will hold a conference call for investors on Thursday, July 28, 2011, at 11 a.m. Eastern Daylight Time. The conference call will be simulcast live on the Internet and is accessible from the Investor Relations section of www.libbey.com. To listen to the call, please go to the website at least 10 minutes early to register, download and install any necessary software. A replay will be available for 30 days after the conclusion of the call.

This press release includes forward-looking statements as defined in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements only reflect the Company's best assessment at this time and are indicated by words or phrases such as "goal," "expects," " believes," "will," "estimates," "anticipates," or similar phrases. Investors are cautioned that forward-looking statements involve risks and uncertainty and that actual results may differ materially from these statements, 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 14, 2011. Important factors potentially affecting performance include but are not limited to increased competition from foreign suppliers endeavoring to sell glass tableware in the United States and Mexico; the impact of lower duties for imported products; global economic conditions and the related impact on consumer spending levels; major slowdowns in the retail, travel or entertainment industries in the United States, Canada, Mexico, Western Europe and Asia, caused by terrorist attacks or otherwise; significant increases in per-unit costs for natural gas, electricity, corrugated packaging, and other purchased materials; high levels of indebtedness; high interest rates that increase the Company's borrowing costs or volatility in the financial markets that could constrain liquidity and credit availability; protracted work stoppages related to collective bargaining agreements; increases in expense associated with higher medical costs, increased pension expense associated with lower returns on pension investments and increased pension obligations; devaluations and other major currency fluctuations relative to the U.S. dollar and the Euro that could reduce the cost competitiveness of the Company's products compared to foreign competition; the effect of high inflation in Mexico and exchange rate changes to the value of the Mexican peso and the earnings and cash flow of Crisa, expressed under U.S. GAAP; the inability to achieve savings and profit improvements at targeted levels in the Company's operations or within the intended time periods; and whether the Company completes any significant acquisition and whether such acquisitions can operate profitably. Any forward-looking statements speak only as of the date of this press release, and the Company assumes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date of this press release.

Libbey Inc.:

  • is the largest manufacturer of glass tableware in the western hemisphere and one of the largest glass tableware manufacturers in the world;
  • is the leading manufacturer of tabletop products for the U.S. foodservice industry; and
  • supplies products to foodservice, retail, industrial and business-to-business customers in over 100 countries.

Based in Toledo, Ohio, since 1888, Libbey operates glass tableware manufacturing plants in the United States in Louisiana and Ohio, as well as in Mexico, China, Portugal and the Netherlands. Its Crisa subsidiary, located in Monterrey, Mexico, is the leading producer of glass tableware in Mexico and Latin America. Its Royal Leerdam subsidiary, located in Leerdam, Netherlands, is among the world leaders in producing and selling glass stemware to retail, foodservice and industrial clients. Its Crisal subsidiary, located in Portugal, provides an expanded presence in Europe. Its Syracuse China subsidiary designs and distributes an extensive line of high-quality ceramic dinnerware, principally for foodservice establishments in the United States. Its World Tableware subsidiary imports and sells a full-line of metal flatware and holloware and an assortment of ceramic dinnerware and other tabletop items principally for foodservice establishments in the United States. In 2010, Libbey Inc.'s net sales totaled $799.8 million.

LIBBEY INC.


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(Dollars in thousands, except per-share amounts)


(unaudited)












Three Months Ended June 30,





2011


2010


Net sales


$ 214,013


$ 203,036


Freight billed to customers


838


420


Total revenues


214,851


203,456









Cost of sales (1)


165,015


155,425


Gross profit


49,836


48,031









Selling, general and administrative expenses (1)

25,224


24,719


Special charges (1)


(100)


156


Income from operations


24,712


23,156


Other income (1)


3,064


1,656









Earnings before interest and income taxes


27,776


24,812









Interest expense


10,787


11,768


Income before income taxes


16,989


13,044









Provision for income taxes (1)


1,583


3,477









Net income


$ 15,406


$ 9,567
















Net income per share:






Basic


$ 0.77


$ 0.59


Diluted


$ 0.74


$ 0.47









Weighted average shares:






Outstanding


20,099


16,352


Diluted


20,861


20,441
















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








LIBBEY INC.


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(Dollars in thousands, except per-share amounts)


(unaudited)












Six Months Ended June 30,





2011


2010


Net sales


$ 395,028


$ 376,940


Freight billed to customers


1,249


854


Total revenues


396,277


377,794









Cost of sales (1)


310,295


295,886


Gross profit


85,982


81,908









Selling, general and administrative expenses (1)

50,626


47,543


Special charges (1)


(49)


388


Income from operations


35,405


33,977


(Loss) gain on redemption of debt (1)


(2,803)


56,792


Other income (1)


6,070


893









Earnings before interest and income taxes


38,672


91,662









Interest expense


22,370


21,388


Income before income taxes


16,302


70,274









Provision for income taxes


1,897


5,297


Net income


$ 14,405


$ 64,977
















Net income per share:






Basic


$ 0.72


$ 3.98


Diluted


$ 0.69


$ 3.21









Weighted average shares:






Outstanding


20,027


16,308


Diluted


20,812


20,245
















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








LIBBEY INC.




(Dollars in thousands)










June 30, 2011


December 31, 2010




(unaudited)




ASSETS











Cash & cash equivalents

$ 44,309


$ 76,258


Accounts receivable - net

97,687


92,101


Inventories - net

168,197


148,146


Other current assets

13,548


6,437


Total current assets

323,741


322,942








Pension asset

14,738


12,767








Goodwill and purchased intangibles - net

188,801


192,474








Property, plant and equipment - net

269,097


270,397








Other assets

18,874


20,391








Total assets

$ 815,251


$ 818,971














LIABILITIES AND SHAREHOLDERS' EQUITY











Accounts payable

$ 61,612


$ 59,095


Accrued liabilities

88,309


83,298


Pension liability (current portion)

6,132


2,330


Nonpension postretirement benefits (current portion)

5,017


5,017


Other current liabilities

2,422


7,281


Long-term debt due within one year

3,393


3,142


Total current liabilities

166,885


160,163








Long-term debt

409,109


443,983


Pension liability

105,800


115,521


Nonpension postretirement benefits

67,910


67,737


Other liabilities

17,693


20,301


Total liabilities

767,397


807,705








Common stock, treasury stock, capital in excess of par value and warrants

302,724


300,889


Retained deficit

(164,272)


(178,677)


Accumulated other comprehensive loss

(90,598)


(110,946)


Total shareholders' equity

47,854


11,266








Total liabilities and shareholders' equity

$ 815,251


$ 818,971







LIBBEY INC.


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW


(Dollars in thousands)


(unaudited)






Three Months Ended June 30,




2011


2010








Operating activities:





Net income

$ 15,406


$ 9,567








Adjustments to reconcile net income to net





cash provided by operating activities:











Depreciation and amortization

11,027


10,568


(Gain) loss on asset sales

(3,436)


185


Change in accounts receivable

(4,216)


(7,096)


Change in inventories

(4,331)


(3,896)


Change in accounts payable

1,339


5,190


Accrued interest and amortization of discounts, warrants and finance fees

9,479


10,585


Pension & nonpension postretirement

(507)


(134)


Restructuring

(421)


2,827


Accrued liabilities & prepaid expenses

9,476


6,843


Income taxes

(5,443)


3,405


Share-based compensation expense

1,140


1,385


Other operating activities

401


(1,317)


Net cash provided by operating activities

29,914


38,112








Investing activities:





Additions to property, plant and equipment

(9,892)


(7,231)


Net proceeds from sale of Traex

12,842


-


Proceeds from asset sales and other

597


-


Net cash provided by (used in) investing activities

3,547


(7,231)








Financing activities:





Net (repayments) on ABL credit facility

(2,245)


-


Other repayments

(49)


(632)


Stock options exercised

3


8


Debt issuance costs and other

(327)


(1,463)


Net cash used in financing activities

(2,618)


(2,087)








Effect of exchange rate fluctuations on cash

354


(648)








Increase in cash

31,197


28,146








Cash at beginning of period

13,112


18,027








Cash at end of period

$ 44,309


$ 46,173







LIBBEY INC.


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW


(Dollars in thousands)


(unaudited)






Six Months Ended June 30,




2011


2010








Operating activities:





Net income

$ 14,405


$ 64,977








Adjustments to reconcile net income to net





cash provided by (used in) operating activities:











Depreciation and amortization

21,908


20,954


(Gain) loss on asset sales

(6,796)


265


Change in accounts receivable

(4,802)


(13,612)


Change in inventories

(19,072)


(14,800)


Change in accounts payable

672


788


Accrued interest and amortization of discounts, warrants and finance fees

826


15,791


Gain on redemption of New PIK Notes

-


(70,193)


Payment of interest on New PIK Notes

-


(29,400)


Call premium on senior notes and floating rate notes

1,203


8,415


Write-off of financing fees & discounts on senior notes, old ABL & floating rate notes

1,600


4,986


Pension & nonpension postretirement

2,944


2,871


Restructuring

(566)


2,396


Accrued liabilities & prepaid expenses

1,209


(2,464)


Income taxes

(9,746)


(239)


Share-based compensation expense

1,967


1,831


Other operating activities

1,082


(619)


Net cash provided by (used in) operating activities

6,834


(8,053)








Investing activities:





Additions to property, plant and equipment

(18,398)


(11,379)


Net proceeds from sale of Traex

12,842


-


Call premium on senior notes and floating rate notes

(1,203)


(8,415)


Proceeds from asset sales and other

5,199


-


Net cash used in investing activities

(1,560)


(19,794)








Financing activities:





Net borrowings on ABL credit facility

2,105


-


Other repayments

(97)


(91)


Other borrowings

-


215


Floating rate note payments

-


(306,000)


Senior note payments

(40,000)


-


PIK Note payment

-


(51,031)


Proceeds from senior secured notes

-


392,328


Stock options exercised

478


8


Debt issuance costs and other

(443)


(15,496)


Net cash (used in) provided by financing activities

(37,957)


19,933








Effect of exchange rate fluctuations on cash

734


(1,002)








Decrease in cash

(31,949)


(8,916)








Cash at beginning of period

76,258


55,089








Cash at end of period

$ 44,309


$ 46,173







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
















Table 1














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










(Dollars in thousands, except per-share amounts)












(unaudited)






























Three Months Ended June 30,




2011


2010




As Reported


Special Items


As Adjusted


As Reported


Special Items


As Adjusted


Net sales


$ 214,013


$ -


$ 214,013


$ 203,036


$ -


$ 203,036


Freight billed to customers


838


-


838


420


-


420


Total revenues


214,851


-


214,851


203,456


-


203,456


Cost of sales


165,015


43


164,972


155,425


1,742


153,683


Gross profit


49,836


(43)


49,879


48,031


(1,742)


49,773
















Selling, general and administrative expenses


25,224


(385)


25,609


24,719


-


24,719


Special charges


(100)


(100)


-


156


156


-


Income from operations


24,712


442


24,270


23,156


(1,898)


25,054


(Loss) gain on redemption of debt


0


-


0








Other income (expense)


3,064


3,537


(473)


1,656


-


1,656
















Earnings before interest and income taxes


27,776


3,979


23,797


24,812


(1,898)


26,710


Interest expense


10,787


-


10,787


11,768


-


11,768


Income before income taxes


16,989


3,979


13,010


13,044


(1,898)


14,942
















Provision for income taxes


1,583


(922)


2,505


3,477


-


3,477


Net income


$ 15,406


$ 4,901


$ 10,505


$ 9,567


$ (1,898)


$ 11,465






























Net income per share:














Basic


$ 0.77


$ 0.24


$ 0.52


$ 0.59


$ (0.12)


$ 0.70


Diluted


$ 0.74


$ 0.23


$ 0.50


$ 0.47


$ (0.09)


$ 0.56






























Weighted average shares:














Outstanding


20,099






16,352






Diluted


20,861






20,441





















Three Months Ended June 30, 2011


Three Months Ended June 30, 2010












Total






Total




Sale of


Restructuring


Sale of




Special


Restructuring




Special


Special Items Detail-(income) expense:


Land (1)


Charges (2)


Traex (3)


Other (4)


Items


Charges (2)


Other (5)


Items




















Cost of sales


$ -


$ 43


$ -


$ -


$ 43


$ -


$ 1,742


$ 1,742




















SG&A


-


-


-


(385)


(385)


-


-


-




















Special charges


-


(100)


-


-


(100)


156


-


156




















Other (income) expense


-


-


(3,321)


(216)


(3,537)


-


-


-




















Income taxes


(922)


-


-


-


(922)


-


-


-




















Total Special Items


$ (922)


$ (57)


$ (3,321)


$ (601)


$ (4,901)


$ 156


$ 1,742


$ 1,898
























































(1) Tax effect on the gain on the sale of land at our Royal Leerdam facility.


(2) Restructuring charges are related to the closure of our Syracuse, New York, manufacturing facility, our Mira Loma, California, distribution center and the decorating operations at our Shreveport manufacturing facility.


(3) Gain on the sale of Traex subsidiary in April, 2011.


(4) SG&A includes CEO transition expenses of $420, net of an equipment credit of $805.


(5) Includes a write down of certain after-processing equipment within our Glass Operations segment and other items.



















Table 2














Reconciliation of "As Reported" Results to "As Adjusted" Results - Six Months








(Dollars in thousands, except per-share amounts)












(unaudited)






























Six Months Ended June 30,




2011


2010




As Reported


Special Items


As Adjusted


As Reported


Special Items


As Adjusted


Net sales


$ 395,028


$ -


$ 395,028


$ 376,940


$ -


$ 376,940


Freight billed to customers


1,249


-


1,249


854


-


854


Total revenues


396,277


-


396,277


377,794


-


377,794


Cost of sales


310,295


43


310,252


295,886


1,742


294,144


Gross profit


85,982


(43)


86,025


81,908


(1,742)


83,650
















Selling, general and administrative expenses


50,626


(385)


51,011


47,543


-


47,543


Special charges


(49)


(49)


-


388


388


-


Income from operations


35,405


391


35,014


33,977


(2,130)


36,107


(Loss) gain on redemption of debt


(2,803)


(2,803)


-


56,792


56,792


-


Other income (expense)


6,070


6,982


(912)


893


(130)


1,023
















Earnings before interest and income taxes


38,672


4,570


34,102


91,662


54,532


37,130


Interest expense


22,370


-


22,370


21,388


-


21,388


Income before income taxes


16,302


4,570


11,732


70,274


54,532


15,742
















Provision for income taxes


1,897


-


1,897


5,297


-


5,297


Net income


$ 14,405


$ 4,570


$ 9,835


$ 64,977


$ 54,532


$ 10,445






























Net income per share:














Basic


$ 0.72


$ 0.23


$ 0.49


$ 3.98


$ 3.34


$ 0.64


Diluted


$ 0.69


$ 0.22


$ 0.47


$ 3.21


$ 2.69


$ 0.52






























Weighted average shares:














Outstanding


20,027






16,308






Diluted


20,812






20,245




























Six Months Ended June 30, 2011




Six Months Ended June 30, 2010














Total


Gain on








Total




Sale of


Restructuring


Finance


Sale of




Special


PIK


Restructuring


Finance




Special


Special Items Detail-(income) expense:


Land (1)


Charges (2)


Fees (3)


Traex (4)


Other (5)


Items


Notes (6)


Charges (2)


Fees (3)


Other (7)


Items


























Cost of sales


$ -


$ 43


$ -


$ -


$ -


$ 43


$ -


$ -


$ -


$ 1,742


$ 1,742


























SG&A


-


-


-


-


(385)


(385)


-


-


-


-


-


























Special charges


-


(49)


-


-


-


(49)


-


388


-


-


388


























Loss (gain) on redemption of debt


-


-


2,803


-


-


2,803


(70,193)


-


13,401


-


(56,792)


























Other (income) expense


(3,445)


-


-


(3,321)


(216)


(6,982)


-


130


-


-


130


























Total Special Items


$ (3,445)


$ (6)


$ 2,803


$ (3,321)


$ (601)


$ (4,570)


$ (70,193)


$ 518


$ 13,401


$ 1,742


$ (54,532)


















































(1) Net gain on the sale of land at our Royal Leerdam facility.


(2) Restructuring charges are related to the closure of our Syracuse, New York, manufacturing facility, our Mira Loma, California, distribution center and the decorating operations at our Shreveport manufacturing facility.


(3) Finance fees include the write-off of unamortized finance fees and discounts and call premium payments on the $40.0 million senior notes redeemed in March 2011 and floating rate senior notes refinanced in February 2010 and unamortized finance fees on the refinanced credit facility in February 2010.


(4) Gain on the sale of Traex subsidiary in April, 2011.


(5) SG&A includes CEO transition expenses of $420, net of an equipment credit of $805.


(6) Gain on PIK Notes is the difference between the carrying value and the face value of the PIK Notes when we redeemed them in February 2010.


(7) Includes a write down of certain after-processing equipment within our Glass Operations segment and other items.

























Table 3











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









(Dollars in thousands)


































Three Months Ended June 30,



Six Months ended June 30,




2011


2010



2011


2010













Reported net income


$ 15,406


$ 9,567



$ 14,405


$ 64,977













Add:











Interest expense


10,787


11,768



22,370


21,388


Provision for income taxes


1,583


3,477



1,897


5,297


Depreciation and amortization


11,027


10,568



21,908


20,954


EBITDA


38,803


35,380



60,580


112,616













Add: Special items before interest and taxes


(3,979)


1,898



(4,570)


(54,532)













Adjusted EBITDA


$ 34,824


$ 37,278



$ 56,010


$ 58,084
























Table 4






















Reconciliation of Net Cash provided by (used in)
Operating Activities to Free Cash Flow











(Dollars in thousands)
























Three Months Ended June 30,



Six Months ended June 30,




2011


2010



2011


2010













Net cash provided by (used in) operating activities


$ 29,914


$ 38,112



$ 6,834


$ (8,053)


Capital expenditures


(9,892)


(7,231)



(18,398)


(11,379)


Net proceeds from sale of Traex


12,842


-



12,842


-


Proceeds from asset sales and other


597


-



5,199


-


Payment of interest on New PIK Notes


-


-



-


29,400


Free Cash Flow


$ 33,461


$ 30,881



$ 6,477


$ 9,968













Table 5









Summary Business Segment Information









(Dollars in thousands)




























Three months ended June 30,


Six months ended June 30,



2011


2010


2011


2010


Net Sales:









Glass Operations (1)

$ 194,487


$ 180,815


$ 356,540


$ 335,959


Other Operations (2)

19,690


22,376


38,851


41,250


Eliminations

(164)


(155)


(363)


(269)


Consolidated

$ 214,013


$ 203,036


$ 395,028


$ 376,940











Segment Earnings before Interest & Taxes
(Segment EBIT) (3):









Glass Operations (1)

$ 29,973


$ 31,188


$ 47,364


$ 46,614


Other Operations (2)

3,762


4,754


6,641


8,239


Segment EBIT

$ 33,735


$ 35,942


$ 54,005


$ 54,853











Reconciliation of Segment EBIT to Net Income:









Segment EBIT

$ 33,735


$ 35,942


$ 54,005


$ 54,853


Retained corporate costs (4)

(9,938)


(9,232)


(19,903)


(17,723)


Consolidated Adjusted EBIT

23,797


26,710


34,102


37,130











Gain on sale of Traex

3,321


-


3,321


-


Gain on sale of land

-


-


3,445


-


(Loss) gain on redemption of debt

-


-


(2,803)


56,792


Restructuring and other charges

1,078


(2,843)


1,027


(3,205)


Other special income (charges)

(420)


945


(420)


945


Special Items before interest and taxes

3,979


(1,898)


4,570


54,532











Interest expense

(10,787)


(11,768)


(22,370)


(21,388)


Income taxes

(1,583)


(3,477)


(1,897)


(5,297)


Net income

$ 15,406


$ 9,567


$ 14,405


$ 64,977











Depreciation & Amortization:









Glass Operations (1)

$ 10,531


$ 10,025


$ 20,780


$ 19,869


Other Operations (2)

54


184


246


371


Corporate

442


359


882


714


Consolidated

$ 11,027


$ 10,568


$ 21,908


$ 20,954




















Notes:


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


(2) Other Operations--includes worldwide sales of ceramic dinnerware, metal tableware, holloware and serveware and plastic items.


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


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










SOURCE Libbey Inc.

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