LIBBEY INC, 10-Q filed on 5/9/2014
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2014
Apr. 30, 2014
Entity Information [Line Items]
 
 
Entity Registrant Name
LIBBEY INC 
 
Entity Central Index Key
0000902274 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Accelerated Filer 
 
Document Type
10-Q 
 
Document Period End Date
Mar. 31, 2014 
 
Document Fiscal Year Focus
2014 
 
Document Fiscal Period Focus
Q1 
 
Amendment Flag
false 
 
Entity Common Stock, Shares Outstanding
 
21,477,692 
Condensed Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Net sales
$ 181,581 
$ 183,476 
Freight billed to customers
814 
752 
Total revenues
182,395 
184,228 
Cost of sales
150,056 
141,996 
Gross profit
32,339 
42,232 
Selling, general and administrative expenses
28,878 
26,397 
Special charges
4,314 
Income from operations
3,461 
11,521 
Other income (expense)
(322)
(435)
Earnings before interest and income taxes
3,139 
11,086 
Interest expense
7,701 
8,435 
Income (loss) before income taxes
(4,562)
2,651 
Provision (benefit) for income taxes
(1,178)
662 
Net income (loss)
$ (3,384)
$ 1,989 
Net income (loss) per share:
 
 
Basic
$ (0.16)
$ 0.09 
Diluted
$ (0.16)
$ 0.09 
Dividends per share
$ 0 
$ 0 
Condensed Consolidated Statements of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Net income (loss)
$ (3,384)
$ 1,989 
Other comprehensive income (loss):
 
 
Pension and other postretirement benefit adjustments, net of tax
1,349 
2,671 
Change in fair value of derivative instruments, net of tax
138 
1,045 
Foreign currency translation adjustments
(588)
(2,925)
Other comprehensive income, net of tax
899 
791 
Comprehensive income (loss)
$ (2,485)
$ 2,780 
Condensed Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Assets:
 
 
Cash and cash equivalents
$ 24,473 
$ 42,208 
Accounts receivable - net
87,046 
94,549 
Inventories - net
174,179 
163,121 
Prepaid and other current assets
31,899 
24,838 
Total current assets
317,597 
324,716 
Pension asset
34,147 
33,615 
Purchased intangible assets - net
19,051 
19,325 
Goodwill
167,379 
167,379 
Deferred income taxes
5,734 
5,759 
Other assets
13,134 
13,534 
Total other assets
239,445 
239,612 
Property, plant and equipment - net
264,618 
265,662 
Total assets
821,660 
829,990 
Liabilities and Shareholders' Equity:
 
 
Accounts payable
74,099 
79,620 
Salaries and wages
26,796 
32,403 
Accrued liabilities
46,899 
41,418 
Accrued income taxes
1,374 
Pension liability (current portion)
3,161 
3,161 
Non-pension postretirement benefits (current portion)
4,758 
4,758 
Derivative liability
1,644 
Long-term debt due within one year
5,351 
5,391 
Total current liabilities
162,708 
168,125 
Long-term debt
406,808 
406,512 
Pension liability
40,254 
40,033 
Non-pension postretirement benefits
58,822 
59,065 
Deferred income taxes
11,670 
11,672 
Other long-term liabilities
11,732 
13,774 
Total liabilities
691,994 
699,181 
Shareholders' equity:
 
 
Common stock, par value $.01 per share, 50,000,000 shares authorized, 21,440,055 shares issued in 2014 (21,316,480 shares issued in 2013)
214 
213 
Capital in excess of par value
324,708 
323,367 
Retained deficit
(122,995)
(119,611)
Accumulated other comprehensive loss
(72,261)
(73,160)
Total shareholders' equity
129,666 
130,809 
Total liabilities and shareholders' equity
$ 821,660 
$ 829,990 
Condensed Consolidated Balance Sheets Parenthetical (USD $)
Mar. 31, 2014
Dec. 31, 2013
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
50,000,000 
50,000,000 
Common stock, shares issued
21,440,055 
21,316,480 
Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Operating activities:
 
 
Net income (loss)
$ (3,384)
$ 1,989 
Adjustments to reconcile net income (loss) to net cash used in operating activities:
 
 
Depreciation and amortization
10,676 
10,774 
(Gain) loss on asset sales and disposals
(4)
Change in accounts receivable
3,082 
(6,043)
Change in inventories
(11,195)
(10,635)
Change in accounts payable
(5,315)
(7,745)
Accrued interest and amortization of discounts and finance fees
7,256 
8,131 
Pension & non-pension postretirement benefits
1,372 
3,700 
Restructuring
(243)
4,314 
Accrued liabilities & prepaid expenses
(12,369)
(15,792)
Income taxes
(3,153)
(1,626)
Share-based compensation expense
1,003 
824 
Other operating activities
(95)
(573)
Net cash provided by (used in) operating activities
(12,369)
(12,680)
Investing activities:
 
 
Additions to property, plant and equipment
(9,901)
(8,882)
Proceeds from furnace malfunction insurance recovery
4,346 
Proceeds from asset sales and other
Net cash (used in) investing activities
(5,551)
(8,878)
Financing activities:
 
 
Other repayments
(50)
(59)
Stock options exercised
336 
537 
Net cash provided by (used in) financing activities
286 
478 
Effect of exchange rate fluctuations on cash
(101)
(179)
Increase (decrease) in cash
(17,735)
(21,259)
Cash at beginning of period
42,208 
67,208 
Cash at end of period
24,473 
45,949 
Supplemental disclosure of cash flows information:
 
 
Cash paid during the period for interest
184 
288 
Cash paid during the period for income taxes
$ 1,816 
$ 1,884 
Description of the Business
Description of the Business
Description of the Business

Libbey is a leading global manufacturer and marketer of glass tableware products. We believe we have the largest manufacturing, distribution and service network among glass tableware manufacturers in the Western Hemisphere, in addition to supplying to key markets throughout the world. We produce glass tableware in five countries and sell to customers in over 100 countries. We design and market, under our Libbey®, Crisa®, Royal Leerdam®, World® Tableware, Syracuse® China and Crisal Glass® brand names (among others), an extensive line of high-quality glass tableware, ceramic dinnerware, metal flatware, hollowware and serveware items for sale primarily in the foodservice, retail and business-to-business markets. Our sales force presents our products to the global marketplace in a coordinated fashion. We own and operate two glass tableware manufacturing plants in the United States as well as glass tableware manufacturing plants in the Netherlands (Libbey Holland), Portugal (Libbey Portugal), China (Libbey China) and Mexico (Libbey Mexico). In addition, we import products from overseas in order to complement our line of manufactured items. The combination of manufacturing and procurement allows us to compete in the global tableware market by offering an extensive product line at competitive prices.

Our website can be found at www.libbey.com. We make available, free of charge, at this website all of our reports filed or furnished pursuant to Section 13(a) or 15(d) of Securities Exchange Act of 1934, including our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, as well as amendments to those reports. These reports are made available on our website as soon as reasonably practicable after their filing with, or furnishing to, the Securities and Exchange Commission and can also be found at www.sec.gov.

Our shares are traded on the NYSE MKT exchange under the ticker symbol LBY.
Significant Accounting Policies
Significant Accounting Policies
Significant Accounting Policies

See our Form 10-K for the year ended December 31, 2013 for a description of significant accounting policies not listed below.

Basis of Presentation

The Condensed Consolidated Financial Statements include Libbey Inc. and its majority-owned subsidiaries (collectively, Libbey or the Company). Our fiscal year end is December 31st. All material intercompany accounts and transactions have been eliminated. The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Actual results could differ materially from management’s estimates.

Condensed Consolidated Statements of Operations

Net sales in our Condensed Consolidated Statements of Operations include revenue earned when products are shipped and title and risk of loss have passed to the customer. Revenue is recorded net of returns, discounts and incentives offered to customers. Cost of sales includes cost to manufacture and/or purchase products, warehouse, shipping and delivery costs and other costs.

Foreign Currency Translation

Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment, where that local currency is the functional currency, are translated to U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive loss. Income and expense accounts are translated at average exchange rates during the year. The effect of exchange rate changes on transactions denominated in currencies other than the functional currency is recorded in other income (expense).

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax attribute carry-forwards. Deferred income tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Financial Accounting Standards Board Accounting Standards Codification™ (FASB ASC) Topic 740, “Income Taxes,” requires that a valuation allowance be recorded when it is more likely than not that some portion or all of the deferred income tax assets will not be realized. Deferred income tax assets and liabilities are determined separately for each tax jurisdiction in which we conduct our operations or otherwise incur taxable income or losses. In the United States, Portugal and the Netherlands, we have recorded valuation allowances against our deferred income tax assets. See note 6 for further discussion.

Stock-Based Compensation Expense

We account for stock-based compensation expense in accordance with FASB ASC Topic 718, “Compensation — Stock Compensation,” and FASB ASC Topic 505-50, “Equity — Equity-Based Payments to Non-Employees”. Stock-based compensation cost is measured based on the fair value of the equity instruments issued. FASB ASC Topics 718 and 505-50 apply to all of our outstanding unvested stock-based payment awards. Under the terms of the CEO retention award agreement, 115,687 cash settled restricted stock units were granted during the first quarter of 2014. These awards cliff vest on December 31, 2018. Accordingly, awards that will be settled in cash are subject to liability accounting and the fair value of such awards will be remeasured at the end of each reporting period until settled or expired. Stock-based compensation expense charged to the Condensed Consolidated Statements of Operations is as follows:
 
 
Three months ended March 31,
(dollars in thousands)
 
2014
 
2013
Stock-based compensation expense
 
$
1,003

 
$
824


Reclassifications

Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation.

New Accounting Standards

There are no new accounting standards effective in 2014 that are applicable to us.
Balance Sheet Details
Balance Sheet Details
Balance Sheet Details

The following table provides detail of selected balance sheet items:
(dollars in thousands)
March 31, 2014
 
December 31, 2013
Accounts receivable:
 
 
 
Trade receivables
$
85,472

 
$
87,499

Other receivables (see note 15)
1,574

 
7,050

Total accounts receivable, less allowances of $6,216 and $5,846
$
87,046

 
$
94,549

 
 
 
 
Inventories:
 
 
 
Finished goods
$
156,237

 
$
144,945

Work in process
1,650

 
1,615

Raw materials
4,300

 
4,558

Repair parts
10,766

 
10,550

Operating supplies
1,226

 
1,453

Total inventories, less loss provisions of $4,784 and $4,913
$
174,179

 
$
163,121

 
 
 
 
Prepaid and other current assets:
 
 
 
Value added tax
$
9,732

 
$
6,697

Prepaid expenses
10,590

 
8,396

Deferred income taxes
5,840

 
5,840

Prepaid income taxes
5,164

 
3,511

Derivative asset
573

 
394

Total prepaid and other current assets
$
31,899

 
$
24,838

 
 
 
 
Other assets:
 
 
 
Deposits
$
944

 
$
919

Finance fees — net of amortization
10,023

 
10,472

Other assets
2,167

 
2,143

Total other assets
$
13,134

 
$
13,534

 
 
 
 
Accrued liabilities:
 
 
 
Accrued incentives
$
15,801

 
$
17,830

Workers compensation
7,178

 
7,108

Medical liabilities
3,246

 
3,433

Interest
10,138

 
3,331

Commissions payable
856

 
1,067

Withholdings and other non-income tax accruals
2,829

 
1,929

Other accrued liabilities
6,851

 
6,720

Total accrued liabilities
$
46,899

 
$
41,418

 
 
 
 
Other long-term liabilities:
 
 
 
Deferred liability
$
7,863

 
$
7,424

Derivative liability

 
2,073

Other long-term liabilities
3,869

 
4,277

Total other long-term liabilities
$
11,732

 
$
13,774



Borrowings
Borrowings
Borrowings

Borrowings consist of the following:
(dollars in thousands)
Interest Rate
 
Maturity Date
March 31,
2014
 
December 31,
2013
Borrowings under ABL Facility
floating
 
May 18, 2017
$

 
$

Senior Secured Notes
6.875%
(1)
May 15, 2020
405,000

 
405,000

Promissory Note
6.00%
 
April, 2014 to September, 2016
624

 
681

RMB Working Capital Loan
floating
 
September, 2014
5,112

 
5,157

AICEP Loan
0.00%
 
January, 2016 to July 30, 2018
2,388

 
2,389

Total borrowings
 
 
 
413,124

 
413,227

Plus — carrying value adjustment on debt related to the Interest Rate Agreement (1)
(965
)
 
(1,324
)
Total borrowings — net
 
 
 
412,159

 
411,903

Less — long term debt due within one year
 
 
5,351

 
5,391

Total long-term portion of borrowings — net
 
$
406,808

 
$
406,512

_____________________________
(1)
See Interest Rate Agreement under “Senior Secured Notes” below and in note 9.

Amended and Restated ABL Credit Agreement

Libbey Glass and Libbey Europe entered into an Amended and Restated Credit Agreement, dated as of February 8, 2010 and amended as of April 29, 2011 and May 18, 2012 (as amended, the ABL Facility), with a group of four financial institutions. The ABL Facility provides for borrowings of up to $100.0 million, subject to certain borrowing base limitations, reserves and outstanding letters of credit.

All borrowings under the ABL Facility are secured by:
a first-priority security interest in substantially all of the existing and future personal property of Libbey Glass and its domestic subsidiaries (Credit Agreement Priority Collateral);
a first-priority security interest in:
100 percent of the stock of Libbey Glass and 100 percent of the stock of substantially all of Libbey Glass’s present and future direct and indirect domestic subsidiaries;
100 percent of the non-voting stock of substantially all of Libbey Glass’s first-tier present and future foreign subsidiaries; and
65 percent of the voting stock of substantially all of Libbey Glass’s first-tier present and future foreign subsidiaries
a first priority security interest in substantially all proceeds and products of the property and assets described above; and
a second-priority security interest in substantially all of the owned real property, equipment and fixtures in the United States of Libbey Glass and its domestic subsidiaries, subject to certain exceptions and permitted liens (Notes Priority Collateral).

Additionally, borrowings by Libbey Europe under the ABL Facility are secured by:
a first-priority lien on substantially all of the existing and future real and personal property of Libbey Europe and its Dutch subsidiaries; and
a first-priority security interest in:
100 percent of the stock of Libbey Europe and 100 percent of the stock of substantially all of the Dutch subsidiaries; and
100 percent (or a lesser percentage in certain circumstances) of the outstanding stock issued by the first-tier foreign subsidiaries of Libbey Europe and its Dutch subsidiaries.

Swingline borrowings are limited to $15.0 million, with swingline borrowings for Libbey Europe being limited to the U.S. equivalent of $7.5 million. Loans comprising each CBFR (CB Floating Rate) Borrowing, including each Swingline Loan, bear interest at the CB Floating Rate plus the Applicable Rate, and euro-denominated swingline borrowings (Eurocurrency Loans) bear interest calculated at the Netherlands swingline rate, as defined in the ABL Facility. The Applicable Rates for CBFR Loans and Eurocurrency Loans vary depending on our aggregate remaining availability. The Applicable Rates for CBFR Loans and Eurocurrency Loans were 0.50 percent and 1.50 percent, respectively, at March 31, 2014. Libbey pays a quarterly Commitment Fee, as defined by the ABL Facility, on the total credit provided under the ABL Facility. The Commitment Fee was 0.375 percent at March 31, 2014. No compensating balances are required by the Agreement. The Agreement does not require compliance with a fixed charge coverage ratio covenant unless aggregate unused availability falls below $10.0 million. If our aggregate unused ABL availability were to fall below $10.0 million, the fixed charge coverage ratio requirement would be 1:00 to 1:00. Libbey Glass and Libbey Europe have the option to increase the ABL Facility by $25.0 million. There were no Libbey Glass or Libbey Europe borrowings under the facility at March 31, 2014 or at December 31, 2013. Interest is payable on the last day of the interest period, which can range from one month to six months depending on the maturity of each individual borrowing on the facility.

The borrowing base under the ABL Facility is determined by a monthly analysis of the eligible accounts receivable and inventory. The borrowing base is the sum of (a) 85 percent of eligible accounts receivable and (b) the lesser of (i) 85 percent of the net orderly liquidation value (NOLV) of eligible inventory, (ii) 65 percent of eligible inventory, or (iii) $75.0 million.

The available total borrowing base is offset by rent reserves totaling $0.7 million. There were no mark-to-market reserves for natural gas contracts offsetting the borrowing base as of March 31, 2014. The ABL Facility also provides for the issuance of $30.0 million of letters of credit, which are applied against the $100.0 million limit. At March 31, 2014, we had $6.2 million in letters of credit outstanding under the ABL Facility. Remaining unused availability under the ABL Facility was $75.5 million at March 31, 2014, compared to $70.5 million under the ABL Facility at December 31, 2013.

We amended and restated this ABL facility in April 2014. See note 16 for further discussion of this subsequent event.

Senior Secured Notes

On May 18, 2012, Libbey Glass closed its offering of the $450.0 million Senior Secured Notes. The notes offering was issued at par and had related fees of approximately $13.2 million. These fees will be amortized to interest expense over the life of the notes.

The Senior Secured Notes were issued pursuant to an Indenture, dated May 18, 2012 (Notes Indenture), between Libbey Glass, the Company, the domestic subsidiaries of Libbey Glass listed as guarantors therein (Subsidiary Guarantors and together with the Company, Guarantors), and The Bank of New York Mellon Trust Company, N.A., as trustee (Notes Trustee) and collateral agent. Under the terms of the Notes Indenture, the Senior Secured Notes bear interest at a rate of 6.875 percent per year and will mature on May 15, 2020. Although the Notes Indenture does not contain financial covenants, the Notes Indenture contains other covenants that restrict the ability of Libbey Glass and the Guarantors to, among other things:

incur, assume or guarantee additional indebtedness;
pay dividends, make certain investments or other restricted payments;
create liens;
enter into affiliate transactions;
merge or consolidate, or otherwise dispose of all or substantially all the assets of Libbey Glass and the Guarantors; and
transfer or sell assets.

The Notes Indenture provides for customary events of default. In the case of an event of default arising from bankruptcy or insolvency as defined in the Notes Indenture, all outstanding Senior Secured Notes will become due and payable immediately without further action or notice. If any other event of default under the Notes Indenture occurs or is continuing, the Notes Trustee or holders of at least 25 percent in aggregate principal amount of the then outstanding Senior Secured Notes may declare all the Senior Secured Notes to be due and payable immediately.

The Senior Secured Notes and the related guarantees under the Notes Indenture are secured by (i) first priority liens on the Notes Priority Collateral and (ii) second priority liens on the Credit Agreement Priority Collateral.

Prior to May 15, 2015, we may redeem in the aggregate up to 35 percent of the Senior Secured Notes with the net cash proceeds of one or more equity offerings at a redemption price of 106.875 percent of the principal amount, provided that at least 65 percent of the original principal amount of the Senior Secured Notes must remain outstanding after each redemption and that each redemption occurs within 90 days of the closing of the equity offering. In addition, prior to May 15, 2015, but not more than once in any twelve-month period, we may redeem up to 10 percent of the Senior Secured Notes at a redemption price of 103 percent plus accrued and unpaid interest. The Senior Secured Notes are redeemable at our option, in whole or in part, at any time on or after May 15, 2015 at set redemption prices together with accrued and unpaid interest.

On May 7, 2013, Libbey Glass redeemed an aggregate principal amount of $45.0 million of the Senior Secured Notes in accordance with the terms of the Notes Indenture. Pursuant to the terms of the Notes Indenture, the redemption price for the Senior Secured Notes was 103 percent of the principal amount of the redeemed Senior Secured Notes, plus accrued and unpaid interest. At completion of the redemption, the aggregate principal amount of the Senior Secured Notes outstanding was $405.0 million. In conjunction with this redemption, we recorded $2.5 million of expense, representing $1.3 million for an early call premium and $1.2 million for the write off of a pro rata amount of financing fees.

The Senior Secured Notes were repurchased in April and May 2014 in conjunction with a $440.0 million debt offering. See note 16 for a further discussion of this subsequent event.

On June 18, 2012, we entered into an Interest Rate Agreement with respect to $45.0 million of our Senior Secured Notes as a means to manage our fixed to variable interest rate ratio. The Interest Rate Agreement effectively converts this portion of our long-term borrowings from fixed rate debt to variable rate debt. Prior to May 15, 2015, but not more than once in any twelve-month period, the counterparty may call up to 10 percent of the Interest Rate Agreement at a call price of 103 percent. The Interest Rate Agreement is callable at the counterparty’s option, in whole or in part, at any time on or after May 15, 2015 at set call premiums. The variable interest rate for our borrowings related to the Interest Rate Agreement at March 31, 2014, excluding applicable fees, is 5.5 percent. The Interest Rate Agreement expires on May 15, 2020. Total remaining Senior Secured Notes not covered by the Interest Rate Agreement have a fixed interest rate of 6.875 percent per year through May 15, 2020. Since we intend to settle the Interest Rate Agreement in the second quarter of 2014 in connection with the refinancing of our Senior Notes, the related derivative liability is classified as current at March 31, 2014. If the counterparty to this Interest Rate Agreement were to fail to perform, this Interest Rate Agreement would no longer afford us a variable rate. However, we do not anticipate non-performance by the counterparty. The interest rate swap counterparty was rated A+, as of March 31, 2014, by Standard and Poor’s.

The fair market value and related carrying value adjustment are as follows:
(dollars in thousands)
March 31, 2014
 
December 31, 2013
Fair market value of Rate Agreement - asset (liability)
$
(1,644
)
 
$
(2,073
)
Adjustment to increase (decrease) carrying value of the related long-term debt
$
(965
)
 
$
(1,324
)

The fair value of the Interest Rate Agreement is based on the market standard methodology of netting the discounted expected future fixed cash receipts and the discounted future variable cash payments. The variable cash payments are based on an expectation of future interest rates derived from observed market interest rate forward curves. See note 9 for further discussion and the net impact recorded on the Condensed Consolidated Statements of Operations.

Promissory Note

In September 2001, we issued a $2.7 million promissory note at an interest rate of 6.0 percent in connection with the purchase of our Laredo, Texas warehouse facility. At March 31, 2014, we had $0.6 million outstanding on the promissory note. Principal and interest with respect to the promissory note are paid monthly.

Notes Payable

We have an overdraft line of credit for a maximum of €1.0 million. At March 31, 2014, there were no borrowings under the facility, which has an interest rate of 5.80 percent. Interest with respect to the note is paid monthly.

RMB Working Capital Loan

On September 2, 2013, Libbey China entered into a RMB 31.5 million (approximately $5.1 million) working capital loan with CCB to cover seasonal working capital needs. The 364-day loan matures on September 1, 2014, and bears interest at a variable rate as announced by the People's Bank of China. The annual interest rate was 6.3 percent at March 31, 2014, and interest is paid monthly. The obligation is secured by a mortgage lien on the Libbey China facility.

AICEP Loan

In July 2012, Libbey Portugal entered into a loan agreement with Agencia para Investmento Comercio Externo de Portugal, EPE (AICEP), the Portuguese Agency for investment and external trade. The amount of the loan is €1.7 million (approximately $2.4 million) at March 31, 2014, and has an interest rate of 0.0 percent. Semi-annual installments of principal are due beginning in January 2016 through the maturity date in July 2018.

Fair Value of Borrowings

The fair value of our debt has been calculated based on quoted market prices (Level 1 in the fair value hierarchy) for the same or similar issues. Our $405.0 million Senior Secured Notes had an estimated fair value of $442.5 million at March 31, 2014. At December 31, 2013, the Senior Secured Notes had an estimated fair value of $437.4 million. The fair value of the remainder of our debt approximates carrying value at March 31, 2014 and December 31, 2013 due to variable rates.

Capital Resources and Liquidity

Historically, cash flows generated from operations, cash on hand and our borrowing capacity under our ABL Facility have enabled us to meet our cash requirements, including capital expenditures and working capital requirements. At March 31, 2014, we had no borrowings under our ABL Facility and $6.2 million in letters of credit issued under that facility. As a result, we had $75.5 million of unused availability remaining under the ABL Facility at March 31, 2014. In addition, at March 31, 2014, we had $24.5 million of cash on hand.

Based on our operating plans and current forecast expectations, we anticipate that our level of cash on hand, cash flows from operations and borrowing capacity under our ABL Facility will provide sufficient cash availability to meet our ongoing liquidity needs.
Restructuring Charges
Restructuring Charges
Restructuring Charges

Capacity Realignment

In February 2013, we announced plans to discontinue production of certain glassware in North America and reduce manufacturing capacity at our Shreveport, Louisiana, manufacturing facility. As a result, on May 30, 2013, we ceased production of certain glassware in North America, discontinued the use of a furnace at our Shreveport, Louisiana, manufacturing plant and began relocating a portion of the production from the idled furnace to our Toledo, Ohio, and Monterrey, Mexico, locations. In connection with this plan, we expect to incur pretax charges of approximately $8.0 million. For the three months ended March 31, 2014 and 2013, we recorded a pretax charge of $1.0 million and $4.9 million, respectively. These charges included employee termination costs, fixed asset impairment charges, depreciation expense and other restructuring expenses. Employee termination costs include severance, medical benefits and outplacement services for the terminated employees. The write-down of fixed assets was to adjust certain machinery and equipment to the estimated fair market value. These activities are all within the Americas segment and were substantially completed by March 31, 2014.

The following table summarizes the pretax charge incurred in 2014 and 2013:
 
Three months ended March 31,
 
Total
Charges
to Date
(dollars in thousands)
2014
 
2013
 
Accelerated depreciation & other
$

 
$
566

 
$
1,685

Other restructuring expenses
985

 

 
985

Included in cost of sales
985

 
566

 
2,670

 
 
 
 
 
 
Employee termination cost & other

 
2,322

 
1,794

Fixed asset write-down

 
1,992

 
1,924

Other restructuring expenses

 

 
1,141

Included in special charges

 
4,314

 
4,859

Total pretax charge
$
985

 
$
4,880

 
$
7,529


The following is the capacity realignment reserve activity for the three months ended March 31, 2014:
(dollars in thousands)
Reserve
Balance at
January 1, 2014
 
Total
Charge to Earnings
 
Cash
(payments) receipts
 
Non-cash Utilization
 
Reserve
Balance at
March 31, 2014
Employee termination cost & other
$
289

 
$

 
$
(243
)
 
$

 
$
46

Other restructuring expenses

 
985

 
(985
)
 

 

Total
$
289

 
$
985

 
$
(1,228
)
 
$

 
$
46

Income Taxes
Income Taxes
Income Taxes

Our effective tax rate was 25.8 percent for the quarter ended March 31, 2014, compared to 25.0 percent for the quarter ended March 31, 2013. Our effective tax rate differs from the United States statutory tax rate primarily due to valuation allowances, earnings in countries with differing statutory tax rates, accruals related to uncertain tax positions, application of intraperiod tax allocation rules, and tax planning structures. At March 31, 2014 and December 31, 2013, we had $0.8 million and $1.3 million, respectively, of gross unrecognized tax benefits, exclusive of interest and penalties. During the quarter ended March 31, 2014, we recorded an income tax benefit, exclusive of interest and penalties, of $0.5 million due to the reversal of an accrual for an uncertain tax position that expired under the statute of limitations.

FASB ASC 740-20, "Income Taxes - Intraperiod Tax Allocation," requires that the provision for income taxes be allocated between continuing operations and other categories of earnings (such as discontinued operations or other comprehensive income) for each tax jurisdiction. In periods in which there is a year-to-date pre-tax loss from continuing operations and pre-tax income in other categories of earnings, the tax provision is first allocated to the other categories of earnings. A related tax benefit is then recorded in continuing operations. A tax benefit of $0.6 million was recorded in our income tax provision for the quarter ended March 31, 2014. There was no similar benefit recorded for the quarter ended March 31, 2013.

Our current and future provision for income taxes for 2014 is impacted by valuation allowances. In the United States, the Netherlands and Portugal, we have recorded valuation allowances against our deferred income tax assets. We review the need for valuation allowances on a quarterly basis, or more frequently, if events indicate that a review is required in order to assess the likelihood of the realization of our deferred tax assets. In assessing the need for recording or releasing a valuation allowance, we weigh all available positive and negative evidence. Examples of the evidence we consider are cumulative losses in recent years, losses expected in early future years, a history of potential tax benefits expiring unused, prudent and feasible tax planning strategies that could be implemented, and whether there was an unusual, infrequent or extraordinary item to be considered. Despite recent improvement in financial results in the U.S., management concluded that in consideration of the duration and magnitude of our U.S. operating losses, the current U.S. economic environment and the competitive landscape, it is our judgment that we have not yet achieved profitability of a duration and magnitude sufficient to release our valuation allowance against our deferred tax assets. Accordingly, we continue to maintain a valuation allowance related to our net deferred tax assets in the U.S. and certain foreign jurisdictions.

Income tax payments consisted of the following:
 
Three months ended March 31,
(dollars in thousands)
2014
 
2013
Total income tax payments, net of refunds
$
2,728

 
$
2,269

Less: credits or offsets
912

 
385

Cash paid, net
$
1,816

 
$
1,884

Pension and Non-pension Postretirement Benefits
Pension and Non-pension Postretirement Benefits
Pension and Non-pension Postretirement Benefits

We have pension plans covering the majority of our employees. Benefits generally are based on compensation and service for salaried employees and job grade and length of service for hourly employees. Our policy is to fund pension plans such that sufficient assets will be available to meet future benefit requirements. In addition, we have an unfunded supplemental employee retirement plan (SERP) that covers certain salaried U.S.-based employees of Libbey hired before January 1, 2006. The U.S. pension plans cover the salaried U.S.-based employees of Libbey hired before January 1, 2006 and most hourly U.S.-based employees (excluding employees hired at Shreveport after 2008 and at Toledo after September 30, 2010). Effective January 1, 2013, we ceased annual company contribution credits to the cash balance accounts in our Libbey U.S. Salaried Pension Plan and SERP. The non-U.S. pension plans cover the employees of our wholly owned subsidiaries in the Netherlands and Mexico. The plan in Mexico is primarily unfunded.

The components of our net pension expense, including the SERP, are as follows:
Three months ended March 31,
U.S. Plans
 
Non-U.S. Plans
 
Total
(dollars in thousands)
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Service cost
$
1,025

 
$
1,278

 
$
578

 
$
722

 
$
1,603

 
$
2,000

Interest cost
3,870

 
3,481

 
1,424

 
1,256

 
5,294

 
4,737

Expected return on plan assets
(5,608
)
 
(5,599
)
 
(632
)
 
(481
)
 
(6,240
)
 
(6,080
)
Amortization of unrecognized:
 
 
 
 
 
 
 
 
 
 
 
Prior service cost
265

 
293

 
57

 
62

 
322

 
355

Loss
1,242

 
2,087

 
258

 
238

 
1,500

 
2,325

Pension expense
$
794

 
$
1,540

 
$
1,685

 
$
1,797

 
$
2,479

 
$
3,337



We have contributed $1.1 million of cash into our pension plans for the three months ended March 31, 2014. Pension contributions for the remainder of 2014 are estimated to be $5.2 million.

We provide certain retiree health care and life insurance benefits covering our U.S and Canadian salaried employees hired before January 1, 2004 and a majority of our union hourly employees (excluding employees hired at Shreveport after 2008 and at Toledo after September 30, 2010). Employees are generally eligible for benefits upon retirement and completion of a specified number of years of creditable service. Effective January 1, 2013, we ended our existing healthcare benefit for salaried retirees age 65 and older and instead provide a Retiree Health Reimbursement Arrangement (RHRA) that supports retirees in purchasing a Medicare plan that meets their needs. Also effective January 1, 2013, we reduced the maximum life insurance benefit for salaried retirees to $10,000. Benefits for most hourly retirees are determined by collective bargaining. The U.S. non-pension postretirement plans cover the hourly and salaried U.S.-based employees of Libbey (excluding those mentioned above). The non-U.S. non-pension postretirement plans cover the retirees and active employees of Libbey who are located in Canada. The postretirement benefit plans are unfunded.

The provision for our non-pension postretirement benefit expense consists of the following:
Three months ended March 31,
U.S. Plans
 
Non-U.S. Plans
 
Total
(dollars in thousands)
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Service cost
$
252

 
$
392

 
$

 
$

 
$
252

 
$
392

Interest cost
710

 
701

 
27

 
23

 
737

 
724

Amortization of unrecognized:
 
 
 
 
 
 
 
 
 
 
 
Prior service cost
35

 
34

 

 

 
35

 
34

Loss / (gain)
67

 
291

 

 
(1
)
 
67

 
290

Non-pension postretirement benefit expense
$
1,064

 
$
1,418

 
$
27

 
$
22

 
$
1,091

 
$
1,440



Our 2014 estimate of non-pension cash payments is $4.8 million, and we have paid $1.1 million for the three months ended March 31, 2014.
Net Income (loss) per Share of Common Stock
Net Income per Share of Common Stock
Net Income (Loss) per Share of Common Stock

The following table sets forth the computation of basic and diluted earnings (loss) per share:
 
Three months ended March 31,
(dollars in thousands, except earnings per share)
2014
 
2013
Numerators for earnings per share:
 
 
 
Net income (loss) that is available to common shareholders
$
(3,384
)
 
$
1,989

 
 
 
 
Denominator for basic earnings per share:
 
 
 
Weighted average shares outstanding
21,523,077

 
21,114,963

 
 
 
 
Denominator for diluted earnings per share:
 
 
 
Effect of stock options and restricted stock units

 
478,785

Adjusted weighted average shares and assumed conversions
21,523,077

 
21,593,748

 
 
 
 
Basic earnings (loss) per share
$
(0.16
)
 
$
0.09

 
 
 
 
Diluted earnings (loss) per share
$
(0.16
)
 
$
0.09

 
 
 
 
Shares excluded from diluted earnings (loss) per share due to:
 
 
 
Net loss position (excluded from denominator)
418,344

 

Inclusion would have been anti-dilutive (excluded from calculation)
382,109

 
783,843



When applicable, diluted shares outstanding includes the dilutive impact of restricted stock units. Diluted shares also include the impact of eligible employee stock options, which are calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the tax-effected proceeds that hypothetically would be received from the exercise of all in-the-money options are assumed to be used to repurchase shares.

Derivatives
Derivatives
Derivatives

We utilize derivative financial instruments to hedge certain interest rate risks associated with our long-term debt, commodity price risks associated with forecasted future natural gas requirements and foreign exchange rate risks associated with transactions denominated in a currency other than the U.S. dollar. Most of these derivatives, except for a portion of our interest rate swap, qualify for hedge accounting since the hedges are highly effective, and we have designated and documented contemporaneously the hedging relationships involving these derivative instruments. While we intend to continue to meet the conditions for hedge accounting, if hedges do not qualify as highly effective or if we do not believe that forecasted transactions would occur, the changes in the fair value of the derivatives used as hedges would be reflected in our earnings. All of these contracts were accounted for under FASB ASC 815 “Derivatives and Hedging.”

Fair Values

The following table provides the fair values of our derivative financial instruments for the periods presented:
 
 
Asset Derivatives:
(dollars in thousands)
 
March 31, 2014
 
December 31, 2013
Derivatives designated as hedging
instruments under FASB ASC 815:
 
Balance Sheet Location
 
Fair Value
 
Balance Sheet Location
 
Fair Value
Natural gas contracts
 
Prepaid and other current assets
 
$
573

 
Prepaid and other current assets
 
$
394

Natural gas contracts
 
Other assets
 
5

 
Other assets
 
19

Total designated
 
 
 
578

 
 
 
413

Total
 
 
 
$
578

 
 
 
$
413

 
 
 
 
 
 
 
 
 
 
 
Liability Derivatives:
(dollars in thousands)
 
March 31, 2014
 
December 31, 2013
Derivatives designated as hedging
instruments under FASB ASC 815:
 
Balance Sheet Location
 
Fair Value
 
Balance Sheet Location
 
Fair Value
Interest rate contract
 
Derivative liability - current
 
$
1,537

 
Derivative liability - current
 
$

Interest rate contract
 
Other long-term liabilities
 

 
Other long-term liabilities
 
1,866

Total designated
 
 
 
1,537

 
 
 
1,866

Derivatives not designated as hedging
instruments under FASB ASC 815:
 
 
 
 
 
 
 
 
Interest rate contract
 
Derivative liability - current
 
107

 
Derivative liability - current
 

Interest rate contract
 
Other long-term liabilities
 

 
Other long-term liabilities
 
207

Total undesignated
 
 
 
107

 
 
 
207

Total
 
 
 
$
1,644

 
 
 
$
2,073



Interest Rate Swaps as Fair Value Hedges

In 2012, we entered into an interest rate swap agreement (Rate Agreement) with a notional amount of $45.0 million that is to mature in 2020. The Rate Agreement was executed in order to convert a portion of the Senior Secured Notes fixed rate debt into floating rate debt and maintain a capital structure containing fixed and floating rate debt. Since we intend to settle the Rate Agreement in the second quarter of 2014 in connection with the refinancing of our Senior Notes, the related derivative liability is classified as current at March 31, 2014.

$40.5 million of our Rate Agreement is designated and qualifies as a fair value hedge. The change in the fair value of the derivative instrument related to the future cash flows (gain or loss on the derivative) and the offsetting change in the fair value of the hedged long-term debt attributable to the hedged risk are recognized in current earnings. We include the gain or loss on the hedged long-term debt, along with the offsetting loss or gain on the related interest rate swap, in other income (expense), on the Condensed Consolidated Statements of Operations.

As of July 1, 2013, we de-designated 10 percent, or $4.5 million, of our Rate Agreement. As a result, the mark-to-market of the $4.5 million portion of the Rate Agreement is recorded in other income (expense) on the Condensed Consolidated Statements of Operations. For the three months ended March 31, 2014, the mark-to-market adjustment was income of $0.1 million.

The following table provides a summary of the gain (loss) recognized on the Condensed Consolidated Statements of Operations from the designated portion of our Rate Agreement:
 
 
Three months ended March 31,
(dollars in thousands)
 
2014
 
2013
Interest rate swap - designated
 
$
329

 
$
(356
)
Related long-term debt
 
(359
)
 
134

Net impact in other income (expense)
 
$
(30
)
 
$
(222
)

Commodity Futures Contracts Designated as Cash Flow Hedges

We use commodity futures contracts related to forecasted future North American natural gas requirements. The objective of these futures contracts is to limit the fluctuations in prices paid due to price movements in the underlying commodity. We consider our forecasted natural gas requirements in determining the quantity of natural gas to hedge. We combine the forecasts with historical observations to establish the percentage of forecast eligible to be hedged, typically ranging from 40 percent to 70 percent of our anticipated requirements, up to eighteen months in the future. The fair values of these instruments are determined from market quotes. As of March 31, 2014, we had commodity contracts for 1,470,000 million British Thermal Units (BTUs) of natural gas. At December 31, 2013, we had commodity contracts for 1,520,000 million BTUs of natural gas.

All of our natural gas derivatives qualify and are designated as cash flow hedges at March 31, 2014. Hedge accounting is applied only when the derivative is deemed to be highly effective at offsetting changes in fair values or anticipated cash flows of the hedged item or transaction. For hedged forecasted transactions, hedge accounting is discontinued if the forecasted transaction is no longer probable to occur, and any previously deferred gains or losses would be recorded to earnings immediately. Changes in the effective portion of the fair value of these hedges are recorded in other comprehensive income (loss). The ineffective portion of the change in the fair value of a derivative designated as a cash flow hedge is recognized in current earnings. As the natural gas contracts mature, the accumulated gains (losses) for the respective contracts are reclassified from accumulated other comprehensive loss to current expense in cost of sales in our Condensed Consolidated Statements of Operations. We paid (received) additional cash of $(0.5) million and $0.2 million in the three months ended March 31, 2014 and 2013, respectively, due to the difference between the fixed unit rate of our natural gas contracts and the variable unit rate of our natural gas cost from suppliers. Based on our current valuation, we estimate that accumulated losses currently carried in accumulated other comprehensive loss that will be reclassified into earnings over the next twelve months will result in $0.6 million of loss in our Condensed Consolidated Statements of Operations.

The following table provides a summary of the effective portion of derivative gain (loss) recognized in other comprehensive income (loss):
 
 
Three months ended March 31,
(dollars in thousands)
 
2014
 
2013
Derivatives in Cash Flow Hedging relationships:
 
 
 
 
Natural gas contracts
 
$
630

 
$
967

Total
 
$
630

 
$
967



The following table provides a summary of the effective portion of derivative gain (loss) reclassified from accumulated other comprehensive loss to the Condensed Consolidated Statements of Operations:
 
 
 
Three months ended March 31,
(dollars in thousands)
 
 
2014
 
2013
Derivative:
Location:
 
 
 
 
Natural gas contracts
Cost of sales
 
$
465

 
$
(246
)
Total impact on net income (loss)
 
 
$
465

 
$
(246
)


Currency Contracts

Our foreign currency exposure arises from transactions denominated in a currency other than the U.S. dollar primarily associated with our Canadian dollar denominated accounts receivable. We enter into a series of foreign currency contracts to sell Canadian dollars. We had no contracts at March 31, 2014 and December 31, 2013. The fair values of these instruments are determined from market quotes. The values of these derivatives will change over time as cash receipts and payments are made and as market conditions change.

Gains (losses) on derivatives that were not designated as hedging instruments are recorded in current earnings as follows:
 
 
 
Three months ended March 31,
(dollars in thousands)
 
 
2014
 
2013
Derivative:
Location:
 
 

 
 

Currency contracts
Other income (expense)
 
$

 
$
251

Total
 
 
$

 
$
251



We do not believe we are exposed to more than a nominal amount of credit risk in our interest rate swap, natural gas hedges and currency contracts as the counterparties are established financial institutions. The counterparty for the Rate Agreement is rated A+ and the counterparties for the other derivative agreements are rated BBB+ or better as of March 31, 2014, by Standard and Poor’s.
Comprehensive Income (Loss)
Comprehensive Income (Loss)
Comprehensive Income (Loss)

Accumulated other comprehensive loss, net of tax, is as follows:
Three months ended March 31, 2014
(dollars in thousands)
 
Foreign Currency Translation
 
Derivative Instruments
 
Pension and Other Postretirement Benefits
 
Total
Accumulated
Comprehensive Loss
Balance on December 31, 2013
 
$
4,554

 
$
1,221

 
$
(78,935
)
 
$
(73,160
)
 
 
 
 
 
 
 
 
 
Other comprehensive income (loss)
 
(588
)
 
630

 

 
42

Currency impact
 

 

 
13

 
13

 
 
 
 
 
 
 
 
 
Amounts reclassified from accumulated other comprehensive income (loss):
 
 
 
 
 
 
 
 
    Amortization of actuarial loss (1)
 

 

 
1,567

 
1,567

    Amortization of prior service cost (1)
 

 

 
357

 
357

    Cost of sales
 

 
(465
)
 

 
(465
)
Current-period other comprehensive income (loss)
 
(588
)
 
165

 
1,937

 
1,514

Tax effect
 

 
(27
)
 
(588
)
 
(615
)
Balance on March 31, 2014
 
$
3,966

 
$
1,359

 
$
(77,586
)
 
$
(72,261
)



Three months ended March 31, 2013
(dollars in thousands)
 
Foreign Currency Translation
 
Derivative Instruments
 
Pension and Other Postretirement Benefits
 
Total
Accumulated
Comprehensive Loss
Balance on December 31, 2012
 
$
(1,641
)
 
$
489

 
$
(139,888
)
 
$
(141,040
)
 
 
 
 
 
 
 
 
 
Other comprehensive income (loss)
 
(2,925
)
 
967

 

 
(1,958
)
Currency impact
 

 

 
(352
)
 
(352
)
 
 
 
 
 
 
 
 
 
Amounts reclassified from accumulated other comprehensive income (loss):
 
 
 
 
 
 
 
 
    Amortization of actuarial loss (1)
 

 

 
2,600

 
2,600

    Amortization of prior service cost (1)
 

 

 
390

 
390

    Cost of sales
 

 
246

 

 
246

Current-period other comprehensive income (loss)
 
(2,925
)
 
1,213

 
2,638

 
926

Tax effect
 

 
(168
)
 
33

 
(135
)
Balance on March 31, 2013
 
$
(4,566
)
 
$
1,534

 
$
(137,217
)
 
$
(140,249
)
___________________________
(1) These accumulated other comprehensive income components are included in the computation of net periodic benefit cost within the cost of sales and selling, general and administrative expenses on the Condensed Consolidated Statements of Operations.
Condensed Consolidated Guarantor Financial Statements
Condensed Consolidated Guarantor Financial Statements
Condensed Consolidated Guarantor Financial Statements

Libbey Glass is a direct, 100 percent owned subsidiary of Libbey Inc. and is the issuer of the Senior Secured Notes. The obligations of Libbey Glass under the Senior Secured Notes are fully and unconditionally and jointly and severally guaranteed by Libbey Inc. and by certain indirect, 100 percent owned domestic subsidiaries of Libbey Inc., as described below. All are related parties that are included in the Condensed Consolidated Financial Statements for the three months ended March 31, 2014 and March 31, 2013.

At March 31, 2014, December 31, 2013 and March 31, 2013, Libbey Inc.’s indirect, 100 percent owned domestic subsidiaries were Syracuse China Company, World Tableware Inc., LGA4 Corp., LGA3 Corp., The Drummond Glass Company, LGC Corp., Libbey.com LLC, LGFS Inc., and LGAC LLC (collectively, Subsidiary Guarantors). The following tables contain Condensed Consolidating Financial Statements of (a) the parent, Libbey Inc., (b) the issuer, Libbey Glass, (c) the Subsidiary Guarantors, (d) the indirect subsidiaries of Libbey Inc. that are not Subsidiary Guarantors (collectively, Non-Guarantor Subsidiaries), (e) the consolidating elimination entries, and (f) the consolidated totals.
Libbey Inc.
Condensed Consolidating Statements of Comprehensive Income (Loss)
(unaudited)
 
Three months ended March 31, 2014
(dollars in thousands)
Libbey
Inc.
(Parent)
 
Libbey
Glass
(Issuer)
 
Subsidiary
Guarantors
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$

 
$
83,792

 
$
18,697

 
$
98,794

 
$
(19,702
)
 
$
181,581

Freight billed to customers

 
168

 
191

 
455

 

 
814

Total revenues

 
83,960

 
18,888

 
99,249

 
(19,702
)
 
182,395

Cost of sales

 
69,020

 
14,998

 
85,740

 
(19,702
)
 
150,056

Gross profit

 
14,940

 
3,890

 
13,509

 

 
32,339

Selling, general and administrative expenses

 
14,635

 
2,833

 
11,410

 

 
28,878

Special charges

 

 

 

 

 

Income (loss) from operations

 
305

 
1,057

 
2,099

 

 
3,461

Other income (expense)

 
(332
)
 
(10
)
 
20

 

 
(322
)
Earnings (loss) before interest and income taxes

 
(27
)
 
1,047

 
2,119

 

 
3,139

Interest expense

 
5,773

 

 
1,928

 

 
7,701

Income (loss) before income taxes

 
(5,800
)
 
1,047

 
191

 

 
(4,562
)
Provision (benefit) for income taxes

 
(1,035
)
 
24

 
(167
)
 

 
(1,178
)
Net income (loss)

 
(4,765
)
 
1,023

 
358

 

 
(3,384
)
Equity in net income (loss) of subsidiaries
(3,384
)
 
1,381

 

 

 
2,003

 

Net income (loss)
$
(3,384
)
 
$
(3,384
)
 
$
1,023

 
$
358

 
$
2,003

 
$
(3,384
)
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income (loss)
$
(2,485
)
 
$
(2,485
)
 
$
1,160

 
$
164

 
$
1,161

 
$
(2,485
)
 
Three months ended March 31, 2013
(dollars in thousands)
Libbey
Inc.
(Parent)
 
Libbey
Glass
(Issuer)
 
Subsidiary
Guarantors
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$

 
$
86,930

 
$
18,360

 
$
89,379

 
$
(11,193
)
 
$
183,476

Freight billed to customers

 
99

 
234

 
419

 

 
752

Total revenues

 
87,029

 
18,594

 
89,798

 
(11,193
)
 
184,228

Cost of sales

 
62,600

 
14,360

 
76,229

 
(11,193
)
 
141,996

Gross profit

 
24,429

 
4,234

 
13,569

 

 
42,232

Selling, general and administrative expenses

 
15,057

 
2,669

 
8,671

 

 
26,397

Special charges

 
4,314

 

 

 

 
4,314

Income (loss) from operations

 
5,058

 
1,565

 
4,898

 

 
11,521

Other income (expense)

 
(1
)
 
(9
)
 
(425
)
 

 
(435
)
Earnings (loss) before interest and income taxes

 
5,057

 
1,556

 
4,473

 

 
11,086

Interest expense

 
6,420

 

 
2,015

 

 
8,435

Income (loss) before income taxes

 
(1,363
)
 
1,556

 
2,458

 

 
2,651

Provision (benefit) for income taxes

 
(819
)
 
2

 
1,479

 

 
662

Net income (loss)

 
(544
)
 
1,554

 
979

 

 
1,989

Equity in net income (loss) of subsidiaries
1,989

 
2,533

 

 

 
(4,522
)
 

Net income (loss)
$
1,989

 
$
1,989

 
$
1,554

 
$
979

 
$
(4,522
)
 
$
1,989

 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income (loss)
$
2,780

 
$
2,780

 
$
1,696

 
$
(1,552
)
 
$
(2,924
)
 
$
2,780

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Libbey Inc.
Condensed Consolidating Balance Sheet

 
 
 
March 31, 2014 (unaudited)
(dollars in thousands)
Libbey
Inc.
(Parent)
 
Libbey
Glass
(Issuer)
 
Subsidiary
Guarantors
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash and equivalents
$

 
$
8,300

 
$
40

 
$
16,133

 
$

 
$
24,473

Accounts receivable — net

 
32,658

 
5,944

 
48,444

 

 
87,046

Inventories — net

 
58,314

 
22,636

 
93,229

 

 
174,179

Other current assets

 
25,444

 
4,278

 
23,272

 
(21,095
)
 
31,899

Total current assets

 
124,716

 
32,898

 
181,078

 
(21,095
)
 
317,597

Other non-current assets

 
37,192

 
1,379

 
15,051

 
(607
)
 
53,015

Investments in and advances to subsidiaries
129,666

 
314,506

 
199,079

 
(48,583
)
 
(594,668
)
 

Goodwill and purchased intangible assets — net

 
27,423

 
12,347

 
146,660

 

 
186,430

Total other assets
129,666

 
379,121

 
212,805

 
113,128

 
(595,275
)
 
239,445

Property, plant and equipment — net

 
67,758

 
266

 
196,594

 

 
264,618

Total assets
$
129,666

 
$
571,595

 
$
245,969

 
$
490,800

 
$
(616,370
)
 
$
821,660

 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$

 
$
14,458

 
$
2,444

 
$
57,197

 
$

 
$
74,099

Accrued and other current liabilities

 
49,633

 
27,076

 
27,644

 
(21,095
)
 
83,258

Notes payable and long-term debt due within one year

 
239

 

 
5,112

 

 
5,351

Total current liabilities

 
64,330

 
29,520

 
89,953

 
(21,095
)
 
162,708

Long-term debt

 
404,420

 

 
2,388

 

 
406,808

Other long-term liabilities

 
64,542

 
8,036

 
50,507

 
(607
)
 
122,478

Total liabilities

 
533,292

 
37,556

 
142,848

 
(21,702
)
 
691,994

Total shareholders’ equity
129,666

 
38,303

 
208,413

 
347,952

 
(594,668
)
 
129,666

Total liabilities and shareholders’ equity
$
129,666

 
$
571,595

 
$
245,969

 
$
490,800

 
$
(616,370
)
 
$
821,660


Libbey Inc.
Condensed Consolidating Balance Sheet


 
December 31, 2013
(dollars in thousands)
Libbey
Inc.
(Parent)
 
Libbey
Glass
(Issuer)
 
Subsidiary
Guarantors
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash and equivalents
$

 
$
22,070

 
$
62

 
$
20,076

 
$

 
$
42,208

Accounts receivable — net

 
41,193

 
4,562

 
48,794

 

 
94,549

Inventories — net

 
51,571

 
22,907

 
88,643

 

 
163,121

Other current assets

 
23,183

 
3,999

 
18,751

 
(21,095
)
 
24,838

Total current assets

 
138,017

 
31,530

 
176,264

 
(21,095
)
 
324,716

Other non-current assets

 
38,661

 
1,379

 
13,475

 
(607
)
 
52,908

Investments in and advances to subsidiaries
130,809

 
304,266

 
199,573

 
(41,361
)
 
(593,287
)
 

Goodwill and purchased intangible assets — net

 
27,423

 
12,347

 
146,934

 

 
186,704

Total other assets
130,809

 
370,350

 
213,299

 
119,048

 
(593,894
)
 
239,612

Property, plant and equipment — net

 
67,836

 
278

 
197,548

 

 
265,662

Total assets
$
130,809

 
$
576,203

 
$
245,107

 
$
492,860

 
$
(614,989
)
 
$
829,990

 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$

 
$
16,086

 
$
3,404

 
$
60,130

 
$

 
$
79,620

Accrued and other current liabilities

 
50,292

 
26,243

 
27,674

 
(21,095
)
 
83,114

Notes payable and long-term debt due within one year

 
235

 

 
5,156

 

 
5,391

Total current liabilities

 
66,613

 
29,647

 
92,960

 
(21,095
)
 
168,125

Long-term debt