EX-99.1 2 ex-991.htm EXHIBIT 99.1 EX-99.1
Libbey Inc.
Page 1

Exhibit 99.1

Libbey Inc.
300 Madison Ave
P.O. Box 10060
Toledo, OH 43699
 
 
NEWS RELEASE

INVESTOR CONTACT:
 
MEDIA CONTACT:    
Benjamin Schlater
 
Lisa Fell
Vice President, Treasurer, Investor Relations and Corporate Development
 
Director of Corporate
Communications
(419) 325-2612
 
(419) 325-2001
benjamin.schlater@libbey.com
 
lfell@libbey.com

FOR IMMEDIATE RELEASE
THURSDAY, JULY 30, 2015     


LIBBEY INC. ANNOUNCES SECOND QUARTER 2015 FINANCIAL RESULTS
 
•
Company sees solid growth of 6.5 percent (constant currency) in foodservice despite continued weakness in restaurant traffic
•
Total Company sales increased 4.5 percent (constant currency) over prior year through the first half
•
Company reaffirms prior guidance at the low end of the range

TOLEDO, OHIO, JULY 30, 2015--Libbey Inc. (NYSE MKT: LBY), one of the largest glass tableware manufacturers in the world, today reported results for the second quarter-ended June 30, 2015.

Second Quarter Financial Highlights

•
Net sales for the second quarter were $214.1 million, compared to $223.5 million for the second quarter of 2014, a decrease of 4.2 percent (or an increase of 1.4 percent excluding currency fluctuation).

•
Net income for the second quarter of 2015 was $14.4 million, compared to a net loss of $25.2 million in the prior-year second quarter. Net income during the second quarter of 2014 included a $47.2 million charge for the retirement of debt during the period. Adjusted net income (see Table 1) for the second quarter of 2015 was $17.1 million, compared to $22.6 million recorded in the second quarter of 2014.

•
Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) (see Table 3) for the second quarter of 2015 were $34.5 million, compared to $41.0 million in the prior-year quarter.

•
In the second quarter of 2015, Libbey repurchased 153,068 shares at an average price of $40.05 and paid a quarterly dividend of $0.11 per share.

“While net sales growth of 1.4 percent on a constant currency basis was below our expectations for the quarter, we continued to see strong growth of 6.5 percent in our core foodservice business. This is the fourth consecutive

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Libbey Inc.
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quarter in which foodservice traffic was down, yet Libbey has been able to outperform the industry in each quarter by leveraging our financial strength and successful execution of proactive growth strategies. In the second quarter, however, a handful of unanticipated costs and a more inconsistent global backdrop than expected affected our overall results,” said Stephanie A. Streeter, chief executive officer of Libbey Inc. “While these results are disappointing, they have not caused us to revise our outlook for the remainder of 2015. As we look forward, we believe that our strategic growth investments across the business are starting to gain traction and should support our performance in the second half of the year. As a result, we reaffirm our expectations, albeit at the low end of the range, of top-line growth of 5 to 6 percent on a constant currency basis for the full-year 2015 and Adjusted EBITDA margins of approximately 15 percent.”

Second Quarter Segment Sales and Operational Review

•
Net sales in the Americas segment were $149.5 million, compared to $154.5 million in the second quarter of 2014, a decrease of 3.2 percent (or an increase of 0.3 percent excluding currency impact). The reduction in net sales was primarily in the retail and business-to-business channels in Latin America, partially offset by increases in the foodservice channel.

•
Net sales in the EMEA segment decreased 18.3 percent (or an increase of 0.2 percent excluding currency impact) to $32.1 million, compared to $39.3 million in the second quarter of 2014.

•
Net sales in the U.S. Sourcing segment were $22.6 million in the second quarter of 2015, compared to $21.4 million in the prior-year quarter, an increase of 5.4 percent.

•
Net sales in Other were $9.9 million in the second quarter of 2015, compared to $8.4 million in the comparable period last year, reflecting an 18.2 percent increase in sales (18.4 percent excluding currency impact) in the Asia Pacific region.

•
Interest expense was $4.5 million in the second quarter of 2015, a decrease of $1.0 million, compared to $5.5 million in the year-ago period.

•
The Company’s effective tax rate was 14.4 percent for the quarter-ended June 30, 2015, compared to (10.3) percent for the quarter-ended June 30, 2014. The effective rate in both years was generally influenced by foreign earnings with differing statutory rates, foreign withholding tax, accruals related to uncertain tax positions and other activity in jurisdictions with recorded valuation allowances.

Six-Month Financial Highlights

•
Net sales for the first six months of 2015 were $401.4 million, compared to $405.1 million for the first half of 2014, a decrease of 0.9 percent (or an increase of 4.5 percent excluding currency fluctuation).

•
Net income for the first six months of 2015 was $17.5 million, compared to a net loss of $28.6 million during the first half of 2014. Net income for the first six months of 2014 included a $47.2 million charge for the retirement of debt during the period. Adjusted net income (see Table 2) for the first six months of 2015 was $20.7 million, compared to $25.1 million recorded in the first six months of 2014.

•
Adjusted EBITDA (see Table 3) was $54.2 million for the first six months of 2015, compared to $61.1 million for the first half of 2014.

•
Year to date in 2015, Libbey has repurchased 412,473 shares at an average price of $37.03.

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Six-Month Segment Sales and Operational Review

•
Sales in the Americas segment were $277.9 million, compared to $276.4 million in the first six months of 2014, an increase of 0.5 percent (or 3.7 percent excluding currency fluctuation). Sales performance was led by a 5.3 percent increase in sales within our United States and Canada region, partially offset by an 8.9 percent decrease in our Latin America region (or 0.2 percent increase excluding currency impact).

•
Sales in the EMEA segment decreased 17.8 percent (or flat excluding currency impact) to $60.6 million, compared to $73.7 million in the first half of 2014.

•
Sales in the U.S. Sourcing segment increased 12.3 percent to $44.0 million, compared to $39.1 million in the first half of 2014.

•
Sales in Other were $19.0 million in the first six months of 2015, compared to $15.9 million in the prior-year period. This increase was the result of a 19.4 percent increase in sales (20.5 percent excluding currency impact) in the Asia Pacific region.

•
Interest expense in the first six months of 2015 was $9.1 million, a decrease of $4.1 million compared to $13.2 million in the year-ago period, primarily driven by lower interest rates as a result of the refinancing completed during the second quarter of 2014.

•
Our effective tax rate was 17.5 percent for the six months ended June 30, 2015, compared to (4.3) percent for the six months ended June 30, 2014. The effective tax rate was generally influenced by foreign earnings with differing statutory rates, foreign withholding tax, accruals related to uncertain tax positions, intra-period tax allocation and other activity in jurisdictions with recorded valuation allowances.

New High-End Glassware Launch

On July 6, 2015, Libbey disclosed details surrounding the Company’s previously announced $30 million investment at its Shreveport, Louisiana, manufacturing facility with the launch of its premium Perfect Signature™ collection. Manufacturing of the new glassware is anticipated to reach full production during the fourth quarter of this year and is expected to launch in select retail and foodservice markets during the fourth quarter, with a broader rollout planned for 2016. The new high brilliance, elegant glass collection contains the Company’s unique ClearFire™ glass formula and represents the culmination of over two years of research and development, planning, installation and testing of new production equipment. Perfect Signature™ features thin rims, tall stems, a flat foot and unique shapes and will be backed by Libbey's 25-year consumer warranty, which guarantees against chipping.

Balance Sheet and Liquidity

•
Libbey reported that it had available capacity of $76.9 million under its ABL credit facility as of June 30, 2015, with $14.0 million of loans currently outstanding. The Company also had cash on hand of $31.4 million as of June 30, 2015.

•
As of June 30, 2015, working capital, defined as inventories and accounts receivable less accounts payable, was $221.6 million, an increase of $13.7 million compared to $207.9 million at June 30, 2014 (see Table 5). The increase was primarily a result of higher inventories and lower accounts payable, partially offset by lower accounts receivable.

Sherry Buck, chief financial officer, concluded: “We were able to generate free cash flow of $11.2 million during the quarter while still prioritizing several planned capital investments across the business designed to drive future growth. During the second half of this year, we expect to see continued strength in our gross margins and will continue to emphasize returns to shareholders through our balanced capital allocation plan.”

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Webcast Information

Libbey will hold a conference call for investors on Thursday, July 30, 2015, at 11 a.m. Eastern Daylight Time. The conference call will be webcast 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 7 days after the conclusion of the call.

About Libbey Inc.

Based in Toledo, Ohio, Libbey Inc. is one of the largest glass tableware manufacturers in the world. Libbey Inc. operates manufacturing plants in the U.S., Mexico, China, Portugal and the Netherlands. In existence since 1818, the Company supplies tabletop products to retail, foodservice and business-to-business customers in over 100 countries. Libbey's global brand portfolio, in addition to its namesake brand, includes Crisa®, Royal Leerdam®, World® Tableware, Syracuse® China, and Crisal Glass®. In 2014, Libbey Inc.'s net sales totaled $852.5 million. Additional information is available at www.libbey.com.

This press release includes forward-looking statements as defined in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements reflect only the Company's best assessment at this time and are indicated by words or phrases such as "goal," "expects," " believes," "will," "estimates," "anticipates," or similar phrases. Investors are cautioned that forward-looking statements involve risks and uncertainty and that actual results may differ materially from these statements, and that investors should not place undue reliance on such statements. These forward-looking statements may be affected by the risks and uncertainties in the Company's business. This information is qualified in its entirety by cautionary statements and risk factor disclosures contained in the Company's Securities and Exchange Commission filings, including the Company's report on Form 10-K filed with the Commission on March 13, 2015. Important factors potentially affecting performance include but are not limited to risks related to our ability to borrow under our ABL credit agreement; increased competition from foreign suppliers endeavoring to sell glass tableware, ceramic dinnerware and metalware in the United States and Mexico; the impact of lower duties for imported products; global economic conditions and the related impact on consumer spending levels; major slowdowns in the retail, travel or entertainment industries in the United States, Canada, Mexico, Western Europe and Asia, caused by terrorist attacks or otherwise; significant increases in per-unit costs for natural gas, electricity, freight, corrugated packaging, and other purchased materials; high levels of indebtedness; high interest rates that increase the Company's borrowing costs or volatility in the financial markets that could constrain liquidity and credit availability; protracted work stoppages related to collective bargaining agreements; increases in expense associated with higher medical costs, increased pension expense associated with lower returns on pension investments and increased pension obligations; devaluations and other major currency fluctuations relative to the U.S. dollar and the Euro that could reduce the cost competitiveness of the Company's products compared to foreign competition; the effect of high inflation in Mexico and exchange rate changes to the value of the Mexican peso and the earnings and cash flow of Libbey Mexico, expressed under U.S. GAAP; the inability to achieve savings and profit improvements at targeted levels in the Company's operations or within the intended time periods; and whether the Company completes any significant acquisition and whether such acquisitions can operate profitably. Any forward-looking statements speak only as of the date of this press release, and the Company assumes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date of this press release.


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Libbey Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per-share amounts)
(unaudited)

 
Three months ended June 30,
 
2015
 
2014
 
 
 
 
Net sales
$
214,051

 
$
223,536

Freight billed to customers
735

 
893

Total revenues
214,786

 
224,429

Cost of sales (1)
157,896

 
164,162

Gross profit
56,890

 
60,267

Selling, general and administrative expenses (1)
36,390

 
30,726

Income from operations
20,500

 
29,541

Loss on redemption of debt  (1)
—

 
(47,191
)
Other income (1)
846

 
322

Earnings (loss) before interest and income taxes
21,346

 
(17,328
)
Interest expense
4,538

 
5,486

Income (loss) before income taxes
16,808

 
(22,814
)
Provision for income taxes (1)
2,414

 
2,354

Net income (loss)
$
14,394

 
$
(25,168
)
 
 
 
 
Net income (loss) per share:
 
 
 
Basic
$
0.66

 
$
(1.16
)
Diluted
$
0.65

 
$
(1.16
)
Dividends per share
$
0.11

 
$
—

 
 
 
 
Weighted average shares:
 
 
 
Outstanding
21,775

 
21,673

Diluted
22,234

 
21,673


(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,
 
2015
 
2014
 
 
 
 
Net sales
$
401,416

 
$
405,117

Freight billed to customers
1,341

 
1,707

Total revenues
402,757

 
406,824

Cost of sales (1)
303,372

 
314,218

Gross profit
99,385

 
92,606

Selling, general and administrative expenses (1)
70,789

 
59,604

Income from operations
28,596

 
33,002

Loss on redemption of debt (1)
—

 
(47,191
)
Other income (1)
1,673

 
—

Earnings (loss) before interest and income taxes
30,269

 
(14,189
)
Interest expense
9,061

 
13,187

Income (loss) before income taxes
21,208

 
(27,376
)
Provision for income taxes (1)
3,702

 
1,176

Net income (loss)
$
17,506

 
$
(28,552
)
 
 
 
 
Net income (loss) per share:
 
 
 
Basic
$
0.80

 
$
(1.32
)
Diluted
$
0.78

 
$
(1.32
)
Dividends per share
$
0.22

 
$
—

 
 
 
 
Weighted average shares:
 
 
 
Outstanding
21,827

 
21,600

Diluted
22,305

 
21,600


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







Libbey Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)
 
June 30, 2015
 
December 31, 2014
 
(unaudited)
 
 
ASSETS:
 
 
 
Cash and cash equivalents
$
31,352

 
$
60,044

Accounts receivable — net
96,694

 
91,106

Inventories — net
193,728

 
169,828

Other current assets
27,169

 
27,701

Total current assets
348,943

 
348,679

 
 
 
 
Pension asset
848

 
848

Purchased intangibles — net
16,937

 
17,771

Goodwill
164,112

 
164,112

Deferred income taxes
5,521

 
5,566

Other assets
14,168

 
13,976

Total other assets
201,586

 
202,273

Property, plant and equipment — net
282,902

 
277,978

Total assets
$
833,431

 
$
828,930

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
 
 
 
Accounts payable
$
68,865

 
82,485

Salaries and wages
29,630

 
29,035

Accrued liabilities
53,528

 
42,638

Accrued income taxes
1,103

 
2,010

Pension liability (current portion)
1,435

 
1,488

Non-pension postretirement benefits (current portion)
4,800

 
4,800

Derivative liability
2,296

 
2,653

Deferred income taxes
3,633

 
3,633

Long-term debt due within one year
4,577

 
7,658

Total current liabilities
169,867

 
176,400

 
 
 
 
Long-term debt
447,633

 
436,264

Pension liability
50,050

 
56,462

Non-pension postretirement benefits
60,442

 
63,301

Deferred income taxes
5,760

 
5,893

Other long-term liabilities
14,810

 
13,156

Total liabilities
748,562

 
751,476

 
 
 
 
Common stock and capital in excess of par value
326,700

 
331,609

Treasury stock
(5,884
)
 
(1,060
)
Retained deficit
(101,942
)
 
(114,648
)
Accumulated other comprehensive loss
(134,005
)
 
(138,447
)
Total shareholders’ equity
84,869

 
77,454

Total liabilities and shareholders’ equity
$
833,431

 
$
828,930



Libbey Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
 
Three months ended June 30,
 
2015
 
2014
Operating activities:
 
 
 
Net income (loss)
$
14,394

 
$
(25,168
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation and amortization
10,469

 
10,592

Loss on asset sales and disposals
92

 
17

Change in accounts receivable
(1,802
)
 
(19,481
)
Change in inventories
(9,699
)
 
(8,168
)
Change in accounts payable
(5,002
)
 
6,667

Accrued interest and amortization of discounts and finance fees
390

 
(5,911
)
Call premium on senior notes
—

 
37,348

Write-off of finance fees on senior notes
—

 
9,086

Pension & non-pension postretirement benefits
895

 
1,397

Restructuring
—

 
(46
)
Accrued liabilities & prepaid expenses
14,978

 
4,647

Income taxes
422

 
(770
)
Share-based compensation expense
2,515

 
1,634

Other operating activities
90

 
(1,491
)
Net cash provided by operating activities
27,742

 
10,353

 
 
 
 
Investing activities:
 
 
 
Additions to property, plant and equipment
(16,577
)
 
(11,934
)
Proceeds from asset sales and other
2

 
—

Net cash used in investing activities
(16,575
)
 
(11,934
)
 
 
 
 
Financing activities:
 
 
 
Borrowings on ABL credit facility
30,400

 
21,300

Repayments on ABL credit facility
(20,500
)
 
(14,300
)
Other repayments
(12
)
 
(65
)
Other borrowings
—

 
1,964

Payments on 6.875% senior notes
—

 
(405,000
)
Proceeds from Term Loan B
—

 
438,900

Repayments on Term Loan B
(1,100
)
 
—

Call premium on senior notes
—

 
(37,348
)
Stock options exercised
1,141

 
1,786

Debt issuance costs and other
—

 
(6,868
)
Dividends
(2,398
)
 
—

Treasury shares purchased
(6,131
)
 
—

Net cash provided by financing activities
1,400

 
369

 
 
 
 
Effect of exchange rate fluctuations on cash
169

 
(52
)
Increase (decrease) in cash
12,736

 
(1,264
)
 
 
 
 
Cash & cash equivalents at beginning of period
18,616

 
24,473

Cash & cash equivalents at end of period
$
31,352

 
$
23,209



Libbey Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
 
Six months ended June 30,
 
2015
 
2014
Operating activities:
 
 
 
Net income (loss)
$
17,506

 
$
(28,552
)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
 
Depreciation and amortization
20,653

 
21,268

Loss on asset sales and disposals
303

 
13

Change in accounts receivable
(7,449
)
 
(14,403
)
Change in inventories
(26,419
)
 
(19,363
)
Change in accounts payable
(7,341
)
 
1,352

Accrued interest and amortization of discounts and finance fees
602

 
1,345

Call premium on senior notes
—

 
37,348

Write-off of finance fees on senior notes
—

 
9,086

Pension & non-pension postretirement benefits
1,898

 
2,769

Restructuring
—

 
(289
)
Accrued liabilities & prepaid expenses
12,102

 
(7,722
)
Income taxes
(938
)
 
(3,923
)
Share-based compensation expense
4,644

 
2,637

Other operating activities
(1,055
)
 
(1,586
)
Net cash provided by (used in) operating activities
14,506

 
(20
)
 
 
 
 
Investing activities:
 
 
 
Additions to property, plant and equipment
(33,236
)
 
(21,835
)
Proceeds from furnace malfunction insurance recovery
—

 
2,350

Proceeds from asset sales and other
2

 
4

Net cash used in investing activities
(33,234
)
 
(19,481
)
 
 
 
 
Financing activities:
 

 
 

Borrowings on ABL credit facility
44,500

 
21,300

Repayments on ABL credit facility
(30,500
)
 
(14,300
)
Other repayments
(3,267
)
 
(115
)
Other borrowings
—

 
1,964

Payments on 6.875% senior notes
—

 
(405,000
)
Proceeds from Term Loan B
—

 
438,900

Repayments on Term Loan B
(2,200
)
 
—

Call premium on senior notes
—

 
(37,348
)
Stock options exercised
2,989

 
2,122

Debt issuance costs and other
—

 
(6,868
)
Dividends
(4,800
)
 
—

Treasury shares purchased
(15,275
)
 
—

Net cash (used in) provided by financing activities
(8,553
)
 
655

 
 
 
 
Effect of exchange rate fluctuations on cash
(1,411
)
 
(153
)
Decrease in cash
(28,692
)
 
(18,999
)
 
 
 
 
Cash & cash equivalents at beginning of period
60,044

 
42,208

Cash & cash equivalents at end of period
$
31,352

 
$
23,209




In accordance with the SEC’s Regulation G, tables 1 through 6 provide non-GAAP measures used in this earnings release and a reconciliation to the most closely related Generally Accepted Accounting Principle (GAAP) measure. Libbey believes that providing supplemental non-GAAP financial information is useful to investors in understanding Libbey's core business and trends. In addition, it is the basis on which Libbey's management assesses performance. Although Libbey believes that the non-GAAP financial measures presented enhance investors' understanding of Libbey's business and performance, these non-GAAP measures should not be considered an alternative to GAAP.
Table 1
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of "As Reported" Results to "As Adjusted" Results - Quarter
 
 
(dollars in thousands, except per-share amounts)
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended June 30,
 
 
2015
 
2014
 
 
As Reported
 
Special Items
 
As Adjusted
 
As Reported
 
Special Items
 
As Adjusted
Net sales
 
$
214,051

 
$
—

 
$
214,051

 
$
223,536

 
$
—

 
$
223,536

Freight billed to customers
 
735

 
—

 
735

 
893

 
—

 
893

Total revenues
 
214,786

 
—

 
214,786

 
224,429

 
—

 
224,429

Cost of sales
 
157,896

 
223

 
157,673

 
164,162

 
576

 
163,586

Gross profit
 
56,890

 
(223
)
 
57,113

 
60,267

 
(576
)
 
60,843

Selling, general and administrative expenses
 
36,390

 
3,015

 
33,375

 
30,726

 
—

 
30,726

Income from operations
 
20,500

 
(3,238
)
 
23,738

 
29,541

 
(576
)
 
30,117

Loss on redemption of debt
 
—

 
—

 
—

 
(47,191
)
 
(47,191
)
 
—

Other income
 
846

 
566

 
280

 
322

 
—

 
322

Earnings (loss) before interest and income taxes
 
21,346

 
(2,672
)
 
24,018

 
(17,328
)
 
(47,767
)
 
30,439

Interest expense
 
4,538

 
—

 
4,538

 
5,486

 
—

 
5,486

Income (loss) before income taxes
 
16,808

 
(2,672
)
 
19,480

 
(22,814
)
 
(47,767
)
 
24,953

Provision for income taxes
 
2,414

 
30

 
2,384

 
2,354

 
—

 
2,354

Net income (loss)
 
$
14,394

 
$
(2,702
)
 
$
17,096

 
$
(25,168
)
 
$
(47,767
)
 
$
22,599

 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share:
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.66

 
$
(0.12
)
 
$
0.79

 
$
(1.16
)
 
$
(2.20
)
 
$
1.04

Diluted
 
$
0.65

 
$
(0.12
)
 
$
0.77

 
$
(1.16
)
 
$
(2.20
)
 
$
1.02

 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares:
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding
 
21,775

 
 
 
 
 
21,673

 
 
 
21,673

Diluted
 
22,234

 
 
 
 
 
21,673

 
 
 
22,164


 
 
Three months ended June 30, 2015
 
Three months ended June 30, 2014
Special Items Detail - (Income) Expense:
 
Environmental Obligation (1)
 
Reorganization (2)
 
Derivatives (3)
 
Total Special Items
 
Debt Costs(4)
 
Furnace Malfunction (5)
 
Total Special Items
Cost of sales
 
$
223

 
$
—

 
$
—

 
$
223

 
$
—

 
$
576

 
$
576

SG&A
 
—

 
3,015

 
—

 
3,015

 
—

 
—

 
—

Loss on redemption of debt
 
—

 
—

 
—

 
—

 
47,191

 
—

 
47,191

Other (income) expense
 
—

 
—

 
(566
)
 
(566
)
 
—

 
—

 
—

Income taxes
 
—

 
(140
)
 
170

 
30

 
—

 
—

 
—

Total Special Items
 
$
223

 
$
2,875

 
$
(396
)
 
$
2,702

 
$
47,191

 
$
576

 
$
47,767

 
 
 
 
 
 
 
 
 
 
 
(1) Environmental obligation relates to our assessment of Syracuse China Company as a potentially responsible party with respect to the Lower Ley Creek sub-site of the Onondaga Lake Superfund site.
(2) Management reorganization to support our growth strategy.
(3) Derivatives relate to hedge ineffectiveness on our natural gas contracts and interest rate swap, as well as, mark-to-market adjustments on our natural gas contracts that have been de-designated and those for which we did not elect hedge accounting.
(4) Debt costs include the write-off of unamortized finance fees and call premium payments on the $405.0 million senior notes redeemed in April and May 2014, and the write-off of the debt carrying value adjustment related to the termination of the $45.0 million interest rate swap.
(5) Furnace malfunction relates to loss of production at our Toledo, Ohio, manufacturing facility.


 
 
 
 
 
 
 
 
 
 
 
 
 
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,
 
 
2015
 
2014
 
 
As Reported
 
Special Items
 
As Adjusted
 
As Reported
 
Special Items
 
As Adjusted
Net sales
 
$
401,416

 
$
—

 
$
401,416

 
$
405,117

 
$
—

 
$
405,117

Freight billed to customers
 
1,341

 
—

 
1,341

 
1,707

 
—

 
1,707

Total revenues
 
402,757

 
—

 
402,757

 
406,824

 
—

 
406,824

Cost of sales
 
303,372

 
223

 
303,149

 
314,218

 
6,867

 
307,351

Gross profit
 
99,385

 
(223
)
 
99,608

 
92,606

 
(6,867
)
 
99,473

Selling, general and administrative expenses
 
70,789

 
3,250

 
67,539

 
59,604

 
—

 
59,604

Income from operations
 
28,596

 
(3,473
)
 
32,069

 
33,002

 
(6,867
)
 
39,869

Loss on redemption of debt
 
—

 
—

 
—

 
(47,191
)
 
(47,191
)
 
—

Other income (expense)
 
1,673

 
167

 
1,506

 
—

 
70

 
(70
)
Earnings (loss) before interest and income taxes
 
30,269

 
(3,306
)
 
33,575

 
(14,189
)
 
(53,988
)
 
39,799

Interest expense
 
9,061

 
—

 
9,061

 
13,187

 
—

 
13,187

Income (loss) before income taxes
 
21,208

 
(3,306
)
 
24,514

 
(27,376
)
 
(53,988
)
 
26,612

Provision for income taxes
 
3,702

 
(90
)
 
3,792

 
1,176

 
(341
)
 
1,517

Net income (loss)
 
$
17,506

 
$
(3,216
)
 
$
20,722

 
$
(28,552
)
 
$
(53,647
)
 
$
25,095

 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share:
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.80

 
$
(0.15
)
 
$
0.95

 
$
(1.32
)
 
$
(2.48
)
 
$
1.16

Diluted
 
$
0.78

 
$
(0.14
)
 
$
0.93

 
$
(1.32
)
 
$
(2.48
)
 
$
1.14

 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares:
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding
 
21,827

 
 
 
 
 
21,600

 
 
 
21,600

Diluted
 
22,305

 
 
 
 
 
21,600

 
 
 
22,066

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended June 30, 2015
 
Six months ended June 30, 2014
Special Items Detail - (Income) Expense:
 
Reorganization(1)
 
Executive Retirement
 
Derivatives(2)
 
Environmental Obligation(3)
 
Total Special Items
 
Restructuring
Charge(4)
 
Furnace
Malfunction(5)
 
Derivatives(2)
 
Debt Costs(6)
 
Total Special Items
Cost of sales
 
$
—

 
$
—

 
$
—

 
$
223

 
$
223

 
$
985

 
$
5,882

 
$
—

 
$
—

 
$
6,867

SG&A
 
3,015

 
235

 
—

 
—

 
3,250

 
—

 
—

 
—

 
—

 
—

Loss on redemption of debt
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
47,191

 
47,191

Other (income) expense
 
—

 
—

 
(167
)
 
—

 
(167
)
 
—

 
—

 
(70
)
 
 
 
(70
)
Income taxes
 
(140
)
 
—

 
50

 
—

 
(90
)
 
(296
)
 
(45
)
 
—

 
—

 
(341
)
Total Special Items
 
$
2,875

 
$
235

 
$
(117
)
 
$
223

 
$
3,216

 
$
689

 
$
5,837

 
$
(70
)
 
$
47,191

 
$
53,647

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Management reorganization to support our growth strategy.
(2) Derivatives relate to hedge ineffectiveness on our natural gas contracts and interest rate swap, as well as, mark-to-market adjustments on our natural gas contracts that have been de-designated and those for which we did not elect hedge accounting.
(3) Environmental obligation relates to our assessment of Syracuse China Company as a potentially responsible party with respect to the Lower Ley Creek sub-site of the Onondaga Lake Superfund site.
(4) Restructuring charges relate to discontinuing production of certain glassware in North America and reducing manufacturing capacity at our Shreveport, Louisiana, manufacturing facility.
(5) Furnace malfunction relates to loss of production at our Toledo, Ohio, manufacturing facility.
(6) Debt costs include the write-off of unamortized finance fees and call premium payments on the $405.0 million senior notes redeemed in April and May 2014, and the write-off of the debt carrying value adjustment related to the termination of the $45.0 million interest rate swap.


Table 3
 
 
 
 
 
 
 
 
Reconciliation of Net Income (Loss) to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA
(dollars in thousands)
 
 
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2015
 
2014
 
2015
 
2014
Reported net income (loss)
 
$
14,394

 
$
(25,168
)
 
$
17,506

 
$
(28,552
)
Add:
 
 
 
 
 
 
 
 
Interest expense
 
4,538

 
5,486

 
9,061

 
13,187

Provision for income taxes
 
2,414

 
2,354

 
3,702

 
1,176

Depreciation and amortization
 
10,469

 
10,592

 
20,653

 
21,268

EBITDA
 
31,815

 
(6,736
)
 
50,922

 
7,079

Add: Special items before interest and taxes
 
2,672

 
47,767

 
3,306

 
53,988

Adjusted EBITDA
 
$
34,487

 
$
41,031

 
$
54,228

 
$
61,067



Table 4
 
 
 
 
 
 
 
 
Reconciliation of Net Cash Provided by (Used in) Operating Activities to Free Cash Flow
(dollars in thousands)
 
 
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2015
 
2014
 
2015
 
2014
Net cash provided by (used in) operating activities
 
$
27,742

 
$
10,353

 
$
14,506

 
$
(20
)
Capital expenditures
 
(16,577
)
 
(11,934
)
 
(33,236
)
 
(21,835
)
Proceeds from furnace malfunction insurance recovery
 
—

 
—

 
—

 
2,350

Proceeds from asset sales and other
 
2

 
—

 
2

 
4

Free Cash Flow
 
$
11,167

 
$
(1,581
)
 
$
(18,728
)
 
$
(19,501
)


Table 5
 
 
 
 
 
 
Reconciliation to Working Capital
 
 
 
 
 
 
(dollars in thousands)
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
June 30, 2015
 
June 30, 2014
 
December 31, 2014
Add:
 
 
 
 
 
 
Accounts receivable
 
$
96,694

 
$
106,345

 
$
91,106

Inventories
 
193,728

 
182,100

 
169,828

Less: Accounts payable
 
68,865

 
80,546

 
82,485

Working Capital
 
$
221,557

 
$
207,899

 
$
178,449




Table 6
 
 
 
 
 
 
 
 
Summary Business Segment Information
 
 
 
 
 
 
 
 
(dollars in thousands)
(unaudited)
 
Three months ended June 30,
 
Six months ended June 30,
Net Sales:
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
Americas (1)
 
$
149,491

 
$
154,450

 
$
277,863

 
$
276,375

EMEA (2)
 
32,126

 
39,331

 
60,635

 
73,729

U.S. Sourcing (3)
 
22,558

 
21,396

 
43,957

 
39,130

Other (4)
 
9,876

 
8,359

 
18,961

 
15,883

Consolidated
 
$
214,051

 
$
223,536

 
$
401,416

 
$
405,117

 
 
 
 
 
 
 
 
 
Segment Earnings Before Interest & Taxes (Segment EBIT) (5) :
 
 
 
 
 
 
Americas (1)
 
$
28,557

 
$
32,986

 
$
44,880

 
$
47,975

EMEA (2)
 
1,786

 
1,910

 
1,020

 
2,163

U.S. Sourcing (3)
 
1,761

 
2,301

 
3,386

 
3,169

Other (4)
 
1,076

 
869

 
2,946

 
1,314

Segment EBIT
 
$
33,180

 
$
38,066

 
$
52,232

 
$
54,621

 
 
 
 
 
 
 
 
 
Reconciliation of Segment EBIT to Net Income (Loss):
 
 
 
 
 
 
 
 
Segment EBIT
 
$
33,180

 
$
38,066

 
$
52,232

 
$
54,621

Retained corporate costs (6)
 
(9,162
)
 
(7,627
)
 
(18,657
)
 
(14,822
)
Consolidated Adjusted EBIT
 
24,018

 
30,439

 
33,575

 
39,799

Loss on redemption of debt
 
—

 
(47,191
)
 
—

 
(47,191
)
Furnace malfunction
 
—

 
(576
)
 
—

 
(5,882
)
Environmental obligation
 
(223
)
 
—

 
(223
)
 
—

Reorganization charges
 
(3,015
)
 
 
 
(3,015
)
 
 
Restructuring charges
 
—

 
—

 
—

 
(985
)
Derivatives
 
566

 
—

 
167

 
70

Executive retirement
 
—

 
—

 
(235
)
 
—

Special items before interest and taxes
 
(2,672
)
 
(47,767
)
 
(3,306
)
 
(53,988
)
Interest expense
 
(4,538
)
 
(5,486
)
 
(9,061
)
 
(13,187
)
Income taxes
 
(2,414
)
 
(2,354
)
 
(3,702
)
 
(1,176
)
Net income (loss)
 
$
14,394

 
$
(25,168
)
 
$
17,506

 
$
(28,552
)
 
 
 
 
 
 
 
 
 
Depreciation & Amortization:
 
 
 
 
 
 
 
 
Americas (1)
 
$
6,411

 
$
5,851

 
$
12,482

 
$
11,810

EMEA (2)
 
2,137

 
2,738

 
4,314

 
5,364

U.S. Sourcing (3)
 
6

 
7

 
12

 
14

Other (4)
 
1,481

 
1,628

 
2,972

 
3,272

Corporate
 
434

 
368

 
873

 
808

Consolidated
 
$
10,469

 
$
10,592

 
$
20,653

 
$
21,268

(1) Americas—includes worldwide sales of manufactured and sourced glass tableware having an end market destination in North and South America.
(2) EMEA—includes worldwide sales of manufactured and sourced glass tableware having an end market destination in Europe, the Middle East and Africa.
(3) U.S. Sourcing—includes U.S. sales of sourced ceramic dinnerware, metal tableware, hollowware, and serveware.
(4) Other—includes worldwide sales of manufactured and sourced glass tableware having an end market destination in Asia Pacific.
(5) 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 and other allocations that are not considered by management when evaluating performance.
(6) Retained corporate costs includes certain headquarter, administrative and facility costs, and other costs that are not allocable to the reporting segments.