Company Quick10K Filing
Libbey
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 22 $39
10-Q 2019-10-30 Quarter: 2019-09-30
10-Q 2019-08-01 Quarter: 2019-06-30
10-Q 2019-05-01 Quarter: 2019-03-31
10-K 2019-02-27 Annual: 2018-12-31
10-Q 2018-11-06 Quarter: 2018-09-30
10-Q 2018-08-01 Quarter: 2018-06-30
10-Q 2018-05-02 Quarter: 2018-03-31
10-K 2018-03-01 Annual: 2017-12-31
10-Q 2017-11-02 Quarter: 2017-09-30
10-Q 2017-08-02 Quarter: 2017-06-30
10-Q 2017-05-05 Quarter: 2017-03-31
10-K 2017-03-03 Annual: 2016-12-31
10-Q 2016-11-04 Quarter: 2016-09-30
10-Q 2016-08-05 Quarter: 2016-06-30
10-Q 2016-05-03 Quarter: 2016-03-31
10-K 2016-02-29 Annual: 2015-12-31
10-Q 2015-11-06 Quarter: 2015-09-30
10-Q 2015-08-05 Quarter: 2015-06-30
10-Q 2015-05-06 Quarter: 2015-03-31
10-K 2015-03-13 Annual: 2014-12-31
10-Q 2014-11-05 Quarter: 2014-09-30
10-Q 2014-08-08 Quarter: 2014-06-30
10-Q 2014-05-09 Quarter: 2014-03-31
10-K 2014-03-12 Annual: 2013-12-31
10-Q 2013-11-08 Quarter: 2013-09-30
10-Q 2013-08-09 Quarter: 2013-06-30
10-Q 2013-05-10 Quarter: 2013-03-31
10-K 2013-03-18 Annual: 2012-12-31
10-Q 2012-11-08 Quarter: 2012-09-30
10-Q 2012-08-09 Quarter: 2012-06-30
10-Q 2012-05-07 Quarter: 2012-03-31
10-K 2012-03-14 Annual: 2011-12-31
10-Q 2011-11-09 Quarter: 2011-09-30
10-Q 2011-08-05 Quarter: 2011-06-30
10-Q 2011-05-10 Quarter: 2011-03-31
10-K 2011-03-14 Annual: 2010-12-31
10-Q 2010-11-05 Quarter: 2010-09-30
10-Q 2010-07-30 Quarter: 2010-06-30
10-Q 2010-05-10 Quarter: 2010-03-31
10-K 2010-03-15 Annual: 2009-12-31
8-K 2019-12-15 Officers, Exhibits
8-K 2019-11-11 Officers
8-K 2019-10-28 Earnings, Exhibits
8-K 2019-08-26 Exit Costs, Officers, Exhibits
8-K 2019-08-01 Earnings, Exhibits
8-K 2019-05-15 Officers, Shareholder Vote, Exhibits
8-K 2019-04-30 Earnings, Exhibits
8-K 2019-03-12 Officers, Exhibits
8-K 2019-02-18 Earnings, Exit Costs, Exhibits
8-K 2019-01-07 Officers
8-K 2018-11-06 Earnings, Exhibits
8-K 2018-07-31 Earnings, Exhibits
8-K 2018-05-16 Shareholder Vote, Other Events
8-K 2018-05-01 Earnings, Exhibits
8-K 2018-02-27 Earnings, Exhibits
8-K 2018-01-09 Officers
LBY 2019-09-30
Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Qualitative and Quantitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-10.1 ex_160856.htm
EX-31.1 ex_156126.htm
EX-31.2 ex_156127.htm
EX-32.1 ex_156128.htm

Libbey Earnings 2019-09-30

LBY 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
FCEL 47 361 217 68 3 -56 -46 123 5% -2.7 -16%
TAYD 42 41 4 32 8 2 4 36 26% 9.8 5%
BTN 41 61 34 63 14 -9 -7 42 22% -6.4 -15%
POLA 41 30 6 30 9 -0 0 36 30% 80.7 -0%
SCX 39 190 107 228 75 6 10 45 33% 4.5 3%
LBY 39 759 761 787 155 -57 19 430 20% 22.5 -8%
LGL 39 33 4 27 0 2 3 29 0% 10.1 7%
CRR 38 464 158 194 -23 -75 -49 50 -12% -1.0 -16%
BOXL 31 24 21 38 10 -8 -6 32 27% -5.6 -32%
RETO 31 82 29 0 0 0 0 38 0%

10-Q 1 lby20190816_10q.htm FORM 10-Q lby20190816_10q.htm
 

 

Table of Contents



 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2019

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 1-12084

Libbey Inc.

 
 

(Exact name of registrant as specified in its charter)

     

Delaware

 

34-1559357

(State or other jurisdiction of incorporation or organization)

 

(IRS Employer Identification No.)

 

 

300 Madison Avenue, Toledo, Ohio 43604

 

(Address of principal executive offices) (Zip Code)

     

 

419-325-2100

 

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, $.01 par value

LBY

NYSE American

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

 

Large Accelerated Filer

 

Accelerated Filer

 

Non-Accelerated Filer

 

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 

 

Common Stock, $.01 par value 22,355,997 shares at October 23, 2019

 

 

 



 

 

 

TABLE OF CONTENTS

 

 

Page

Item 1. Financial Statements

3

Condensed Consolidated Statements of Operations

3

Condensed Consolidated Statements of Comprehensive Income (Loss)

5

Condensed Consolidated Balance Sheets

6

Condensed Consolidated Statements of Shareholders' Equity (Deficit)

7

Condensed Consolidated Statements of Cash Flows

8

Notes to Condensed Consolidated Financial Statements

9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3. Qualitative and Quantitative Disclosures about Market Risk

33

Item 4. Controls and Procedures

33

PART II — OTHER INFORMATION

33

Item 1. Legal Proceedings

33

Item 1A. Risk Factors

33

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

34

Item 6. Exhibits

34

EXHIBIT INDEX

34

SIGNATURES

35

   

 EX-10.1

 

 EX-31.1

 

 EX-31.2

 

 EX-32.1

 

 EX-101 INSTANCE DOCUMENT

 

 EX-101 SCHEMA DOCUMENT

 

 EX-101 CALCULATION LINKBASE DOCUMENT

 

 EX-101 LABELS LINKBASE DOCUMENT

 

 EX-101 PRESENTATION LINKBASE DOCUMENT

 

 EX-101 DEFINITION LINKBASE DOCUMENT

 

 

 

 

PART I — FINANCIAL INFORMATION

 

Item 1.  Financial Statements

 

Libbey Inc.

Condensed Consolidated Statements of Operations

(dollars in thousands, except per share amounts)

(unaudited)

 

   

Three months ended September 30,

 
   

2019

   

2018

 
Net sales   $ 192,418     $ 190,775  
Freight billed to customers     804       780  
Total revenues     193,222       191,555  
Cost of sales     158,836       154,315  
Gross profit     34,386       37,240  
Selling, general and administrative expenses     30,982       33,336  
Income from operations     3,404       3,904  
Other income (expense)     346       (1,453 )
Earnings before interest and income taxes     3,750       2,451  
Interest expense     5,699       5,652  
Loss before income taxes     (1,949 )     (3,201 )
Provision for income taxes     1,508       1,758  
Net loss   $ (3,457 )   $ (4,959 )
                 

Net loss per share:

               
Basic   $ (0.15 )   $ (0.22 )
Diluted   $ (0.15 )   $ (0.22 )

Dividends declared per share

  $     $  

 

See accompanying notes

 

 

Libbey Inc.

Condensed Consolidated Statements of Operations

(dollars in thousands, except per share amounts)

(unaudited)

 

   

Nine months ended September 30,

 
   

2019

   

2018

 
Net sales   $ 573,542     $ 586,222  
Freight billed to customers     2,298       2,475  
Total revenues     575,840       588,697  
Cost of sales     460,771       471,294  
Gross profit     115,069       117,403  
Selling, general and administrative expenses     94,375       98,396  
Impairment of goodwill and other intangible assets     46,881        
Income (loss) from operations     (26,187 )     19,007  
Other income (expense)     (1,858 )     (980 )
Earnings (loss) before interest and income taxes     (28,045 )     18,027  
Interest expense     17,210       16,192  
Income (loss) before income taxes     (45,255 )     1,835  
Provision for income taxes     6,511       5,767  
Net loss   $ (51,766 )   $ (3,932 )
                 

Net loss per share:

               
Basic   $ (2.31 )   $ (0.18 )
Diluted   $ (2.31 )   $ (0.18 )

Dividends declared per share

  $     $ 0.1175  

 

See accompanying notes

 

 

 

Libbey Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(dollars in thousands)

(unaudited)

 

   

Three months ended September 30,

   

Nine months ended September 30,

 
   

2019

   

2018

   

2019

   

2018

 
                                 
Net loss   $ (3,457 )   $ (4,959 )   $ (51,766 )   $ (3,932 )
                                 

Other comprehensive income (loss):

                               

Pension and other post-retirement benefit adjustments, net of tax

    790       874       3,077       4,508  
Change in fair value of derivative instruments, net of tax     (1,811 )     (734 )     (9,695 )     1,208  
Foreign currency translation adjustments, net of tax     (4,343 )     (2,707 )     (4,640 )     (5,766 )
Other comprehensive income (loss), net of tax     (5,364 )     (2,567 )     (11,258 )     (50 )
                                 
Comprehensive income (loss)   $ (8,821 )   $ (7,526 )   $ (63,024 )   $ (3,982 )

 

See accompanying notes

 

 

 

Libbey Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands, except share amounts)

 

   

September 30, 2019

   

December 31, 2018

 
   

(unaudited)

         

ASSETS

               

Cash and cash equivalents

  $ 27,668     $ 25,066  

Accounts receivable — net

    90,745       83,977  

Inventories — net

    195,669       192,103  

Prepaid and other current assets

    20,709       16,522  

Total current assets

    334,791       317,668  

Purchased intangible assets — net

    11,868       13,385  

Goodwill

    38,431       84,412  

Deferred income taxes

    29,346       26,090  

Other assets

    14,670       7,660  

Operating lease right-of-use assets

    62,052        

Property, plant and equipment — net

    249,734       264,960  

Total assets

  $ 740,892     $ 714,175  
                 

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

               

Accounts payable

  $ 74,963     $ 74,836  

Salaries and wages

    28,409       27,924  

Accrued liabilities

    48,433       43,728  

Accrued income taxes

    4,424       3,639  

Pension liability (current portion)

    3,479       3,282  

Non-pension post-retirement benefits (current portion)

    3,956       3,951  

Operating lease liabilities (current portion)

    12,465        

Long-term debt due within one year

    4,400       4,400  

Total current liabilities

    180,529       161,760  

Long-term debt

    411,906       393,300  

Pension liability

    42,513       45,206  

Non-pension post-retirement benefits

    39,719       43,015  

Noncurrent operating lease liabilities

    50,325        

Deferred income taxes

    2,429       2,755  

Other long-term liabilities

    24,019       18,246  

Total liabilities

    751,440       664,282  

Contingencies (Note 15)

               
                 

Shareholders’ equity (deficit):

               

Common stock, par value $.01 per share, 50,000,000 shares authorized, 22,355,997 shares issued in 2019 (22,157,220 shares issued in 2018)

    224       222  

Capital in excess of par value

    338,098       335,517  

Retained deficit

    (223,207 )     (171,441 )

Accumulated other comprehensive loss

    (125,663 )     (114,405 )

Total shareholders' equity (deficit)

    (10,548 )     49,893  

Total liabilities and shareholders' equity (deficit)

  $ 740,892     $ 714,175  

 

See accompanying notes

 

 

 

Libbey Inc.

Condensed Consolidated Statements of Shareholders' Equity (Deficit)

(dollars in thousands, except share amounts)

(unaudited)

 

Nine months ended September 30, 2019

 

Common Stock

Shares

   

Common Stock

Amount

   

Capital in Excess of

Par Value

   

Retained

Deficit

   

Accumulated Other Comprehensive Loss

   

Total

 
Balance December 31, 2018     22,157,220     $ 222     $ 335,517     $ (171,441 )   $ (114,405 )   $ 49,893  
Net income (loss)                             (4,542 )             (4,542 )
Other comprehensive income (loss)                                     (2,303 )     (2,303 )
Stock compensation expense                     937                       937  
Stock withheld for employee taxes                     (317 )                     (317 )
Stock issued     116,348       1       (8 )                     (7 )
Balance March 31, 2019     22,273,568       223       336,129       (175,983 )     (116,708 )     43,661  
                                                 
Net income (loss)                             (43,767 )             (43,767 )
Other comprehensive income (loss)                                     (3,591 )     (3,591 )
Stock compensation expense                     1,117                       1,117  
Stock withheld for employee taxes                     (92 )                     (92 )
Stock issued     73,518             1                       1  
Balance June 30, 2019     22,347,086       223       337,155       (219,750 )     (120,299 )     (2,671 )
                                                 
Net income (loss)                             (3,457 )             (3,457 )
Other comprehensive income (loss)                                     (5,364 )     (5,364 )
Stock compensation expense                     950                       950  
Stock withheld for employee taxes                     (7 )                     (7 )
Stock issued     8,911       1                             1  
Balance September 30, 2019     22,355,997     $ 224     $ 338,098     $ (223,207 )   $ (125,663 )   $ (10,548 )

 

Nine months ended September 30, 2018

 

Common Stock

Shares

   

Common Stock

Amount

   

Capital in Excess of

Par Value

   

Retained

Deficit

   

Accumulated Other Comprehensive Loss

   

Total

 

Balance December 31, 2017

    22,018,010     $ 220     $ 333,011     $ (161,165 )   $ (105,172 )   $ 66,894  

Cumulative-effect adjustment for the adoption of ASU 2017-12

                            275       (275 )      

Net income (loss)

                            (2,961 )             (2,961 )

Other comprehensive income (loss)

                                    6,558       6,558  

Stock compensation expense

                    270                       270  

Dividends

                            (2,595 )             (2,595 )

Stock withheld for employee taxes

                    (203 )                     (203 )

Stock issued

    63,582       1       91                       92  

Balance March 31, 2018

    22,081,592       221       333,169       (166,446 )     (98,889 )     68,055  
                                                 

Net income (loss)

                            3,988               3,988  

Other comprehensive income (loss)

                                    (4,041 )     (4,041 )

Stock compensation expense

                    1,131                       1,131  

Stock withheld for employee taxes

                    (11 )                     (11 )
Stock issued     50,816                                    

Balance June 30, 2018

    22,132,408       221       334,289       (162,458 )     (102,930 )     69,122  
                                                 
Net income (loss)                             (4,959 )             (4,959 )
Other comprehensive income (loss)                                     (2,567 )     (2,567 )

Stock compensation expense

                    658                       658  

Stock withheld for employee taxes

                    (90 )                     (90 )
Stock issued     12,892             5                       5  

Balance September 30, 2018

    22,145,300     $ 221     $ 334,862     $ (167,417 )   $ (105,497 )   $ 62,169  

 

See accompanying notes

 

 

 

Libbey Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)

 

   

Nine months ended September 30,

 
   

2019

   

2018

 

Operating activities:

               

Net loss

  $ (51,766 )   $ (3,932 )

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

               

Depreciation and amortization

    29,465       34,389  

Impairment of goodwill and other intangible assets

    46,881        

Change in accounts receivable

    (7,575 )     (1,688 )

Change in inventories

    (5,452 )     (24,445 )

Change in accounts payable

    5,987       (5,139 )

Accrued interest and amortization of discounts and finance fees

    868       801  

Pension & non-pension post-retirement benefits, net

    (1,765 )     1,154  

Accrued liabilities & prepaid expenses

    277       6,938  

Income taxes

    (3,066 )     (1,662 )
Cloud computing costs     (3,647 )      

Share-based compensation expense

    2,888       2,127  

Other operating activities

    (429 )     (957 )

Net cash provided by operating activities

    12,666       7,586  
                 

Investing activities:

               

Additions to property, plant and equipment

    (26,903 )     (35,123 )

Net cash used in investing activities

    (26,903 )     (35,123 )
                 

Financing activities:

               

Borrowings on ABL credit facility

    81,971       78,850  

Repayments on ABL credit facility

    (60,305 )     (46,876 )

Other repayments

          (3,077 )

Repayments on Term Loan B

    (3,300 )     (3,300 )
Stock options exercised           5  

Taxes paid on distribution of equity awards

    (416 )     (304 )

Dividends

          (2,595 )

Net cash provided by financing activities

    17,950       22,703  
                 

Effect of exchange rate fluctuations on cash

    (1,111 )     (774 )

Increase (decrease) in cash

    2,602       (5,608 )
                 

Cash & cash equivalents at beginning of period

    25,066       24,696  

Cash & cash equivalents at end of period

  $ 27,668     $ 19,088  
                 

Supplemental disclosure of cash flow information:

               

Cash paid during the period for interest

  $ 15,853     $ 14,868  

Cash paid during the period for income taxes

  $ 7,139     $ 7,219  

 

See accompanying notes

 

 

Libbey Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

 

 

1.    Description of the Business

 

Libbey is a leading global manufacturer and marketer of glass tableware products. We produce glass tableware in five countries and sell to customers in over 100 countries. We design and market, under our Libbey®, Libbey Signature®, Master's Reserve®, 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 channels of distribution. Our sales force presents our tabletop 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 Mexico (Libbey Mexico), the Netherlands (Libbey Holland), Portugal (Libbey Portugal) and China (Libbey China). In addition, we import tabletop 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 tabletop 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 American exchange under the ticker symbol LBY.

 

 

2.    Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited Condensed Consolidated Financial Statements of Libbey Inc. and its majority-owned subsidiaries (collectively, Libbey or the Company) have been prepared in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Item 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month and nine month periods ended September 30, 2019, are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.

 

The balance sheet at December 31, 2018, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The financial information included herein should be read in conjunction with our Consolidated Financial Statements in Item 8 of our Form 10-K for the year ended December 31, 2018.

 

Software We account for software in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 350. Software represents the costs of internally developed and/or purchased software for internal use. Capitalized costs include software packages, installation and internal labor costs of employees devoted to the software development project. Costs incurred to modify existing software, providing significant enhancements and creating additional functionality are also capitalized. Once a project is complete, we estimate the useful life of the internal-use software, generally amortizing these costs over a 3 to 10 year period. Software is classified on the balance sheet in property, plant and equipment, and the related cash flows are shown as cash outflows from investing activities.

 

Cloud Computing Arrangements We account for implementation costs for software that we gain access to in hosted cloud computing arrangements in accordance with FASB ASC 350. Capitalized costs of hosted cloud computing arrangements include configuration, installation, other upfront costs and internal labor costs of employees devoted to the cloud computing software implementation project. Once a project is complete, amortization is computed using the straight-line method over the term of the associated hosting arrangement, generally 3 to 10 years. In connection with our adoption of Accounting Standards Update (ASU) 2018-15 on January 1, 2019, these implementation costs are now classified on the balance sheet in prepaid and other current assets and other assets, and the related cash flows are presented as cash outflows from operations. Prior to January 1, 2019, implementation costs were included in property, plant and equipment, and the related cash flows were shown as cash outflows from investing activities. See New Accounting Standards - Adopted below. Our cloud computing arrangements primarily relate to our new global enterprise resource planning (ERP) system. At September 30, 2019, the net book value of these implementation costs included $0.3 million in prepaid and other current assets and $6.0 million in other assets on the Condensed Consolidated Balance Sheet. Amortization expense for the three and nine-month periods were both immaterial.

 

Leases We determine if an arrangement is a lease at inception. As of January 1, 2019, operating leases are included in operating lease right-of-use (ROU) assets, current operating lease liabilities and noncurrent operating lease liabilities in our balance sheet; related payments are included in operating activities on the statement of cash flows. We currently do not have any finance leases; but, if we do in the future, we will include them in property, plant and equipment, long-term debt due within one year and long-term debt within our balance sheet.

 

ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

 

 

When our leases do not provide an implicit rate, we use our incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments. We give consideration to our secured borrowing rates as well as publicly available data for instruments with similar characteristics when calculating our incremental borrowing rates.

 

The operating lease ROU asset also includes any lease prepayments made before commencement or in advance of the payment due date. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Leases with a term of 12 months or less (short-term leases) are not recorded on the balance sheet. Our lease agreements do not contain any residual value guarantees or material restrictive covenants. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Variable lease costs represent the incremental change in lease payments associated with an indexed rate (i.e. Consumers Price Index), and these costs are not included in the lease liability on the balance sheet because they are unknown at commencement date.

 

We have lease agreements with lease and non-lease components. Non-lease components for real estate leases relate primarily to common area maintenance, insurance, taxes and utilities associated with the properties. For real estate leases and a limited class of equipment leases, we account for the lease and non-lease components separately. Non-lease components are not recorded on the balance sheet as a ROU asset and lease liability and are not included in lease costs. For all other equipment leases, we account for the lease and non-lease components as a single lease component.

 

See New Accounting Standards - Adopted below for the adoption impact of this lease accounting standard.

 

Stock-Based Compensation Expense

 

Stock-based compensation expense charged to the Condensed Consolidated Statements of Operations is as follows:

 

   

Three months ended September 30,

   

Nine months ended September 30,

 

(dollars in thousands)

 

2019

   

2018

   

2019

   

2018

 
Stock-based compensation expense   $ 953     $ 671     $ 2,888     $ 2,127  

 

New Accounting Standards - Adopted

 

Each change to U.S. GAAP is established by the FASB in the form of an ASU to the FASB’s ASC. We consider the applicability and impact of all ASUs. ASUs not listed below were assessed and either were determined to be not applicable or are expected to have minimal impact on the Company’s Condensed Consolidated Financial Statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires a lessee to recognize on the balance sheet ROU assets and corresponding liabilities for both finance and operating leases with lease terms greater than 12 months. On January 1, 2019, we adopted this standard using the optional transition method of applying the modified retrospective approach at our adoption date. Under this method, previously reported comparative periods prior to 2019 have not been restated. We have elected the package of practical expedients permitted under the transition guidance, which allowed us to carry forward our prior conclusions on existing contracts for lease identification, lease classification and initial direct costs. In addition, for most of our classes of equipment leases, we elected the practical expedient to not separate lease and non-lease components. We also made an accounting policy election to keep leases with a term of 12 months or less off of the balance sheet for all classes of underlying assets. At adoption, we had operating leases which resulted in us recognizing operating ROU assets and lease liabilities on the balance sheet of approximately $69 million. The adoption of this ASU did not have a material impact on our condensed consolidated results of operations or cash flows, and there was no cumulative effect adjustment to retained earnings. The new standard also required additional disclosures which are included in note 13.

 

On January 1, 2019, we early adopted ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This standard aligns the requirements for capitalizing implementation costs in a cloud computing arrangement service contract with the requirements for capitalizing implementation costs incurred for internal-use software. The new guidance also prescribes the balance sheet, income statement and cash flow classification of the capitalized implementation costs and related amortization expense, and requires additional quantitative and qualitative disclosures. Prior to January 1, 2019, implementation costs for cloud computing arrangements were capitalized into property, plant and equipment and amortized on a straight-line basis. Upon adoption of this new standard, we reclassed $2.8 million from construction in progress within property, plant, and equipment to other assets. When implementation projects are completed and amortization of capitalized costs begins, a portion is recorded in prepaids and other current assets. Results and disclosures for reporting periods beginning on or after January 1, 2019, are presented under the new guidance within ASU 2018-15, while prior period amounts and disclosures are not adjusted and continue to be reported in accordance with our previous accounting.

 

New Accounting Standards - Not Yet Adopted

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This standard introduces a new approach to estimating credit losses on certain types of financial instruments, including trade receivables, and modifies the impairment model for available-for-sale debt securities. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early application permitted. In October of 2019, the FASB approved a delayed effective date for Smaller Reporting Company filers; thus, our effective date is now for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Although we are still evaluating the impact of this standard, we believe it will not have a material impact on our Condensed Consolidated Financial Statements.

 

 

 

3.    Balance Sheet Details

 

The following table provides detail of selected balance sheet items:

 

(dollars in thousands)

 

September 30, 2019

   

December 31, 2018

 

Accounts receivable:

               
Trade receivables   $ 89,202     $ 82,521  
Other receivables     1,543       1,456  
Total accounts receivable, less allowances of $9,577 and $8,538   $ 90,745     $ 83,977  
                 

Inventories:

               
Finished goods   $ 177,789     $ 175,074  
Work in process     1,433       1,363  
Raw materials     4,243       4,026  
Repair parts     10,282       10,116  
Operating supplies     1,922       1,524  
Total inventories, less loss provisions of $7,342 and $9,453   $ 195,669     $ 192,103  
                 

Accrued liabilities:

               
Accrued incentives   $ 22,621     $ 19,359  
Other accrued liabilities     25,812       24,369  
Total accrued liabilities   $ 48,433     $ 43,728  
 

4.    Borrowings

 

Borrowings consist of the following:

 

           

September 30,

   

December 31,

 

(dollars in thousands)

 

Interest Rate

 

Maturity Date

 

2019

   

2018

 

Borrowings under ABL Facility

 

floating (2)

 

December 7, 2022 (1)

  $ 41,014     $ 19,868  

Term Loan B

 

floating (3)

 

April 9, 2021

    376,900       380,200  

Total borrowings

    417,914       400,068  

Less — unamortized discount and finance fees

    1,608       2,368  

Total borrowings — net

    416,306       397,700  

Less — long term debt due within one year

    4,400       4,400  

Total long-term portion of borrowings — net

  $ 411,906     $ 393,300  

________________________

(1) 

Maturity date will be January 9, 2021, if Term Loan B is not refinanced by this date.

(2) 

The interest rate for the ABL Facility is comprised of several different borrowings at various rates. The weighted average rate of all ABL Facility borrowings was 2.91 percent at September 30, 2019.

(3) 

We have entered into interest rate swaps that effectively fix a series of our future interest payments on a portion of the Term Loan B debt. See interest rate swaps in note 8 for additional details. The Term Loan B floating interest rate was 5.04 percent at September 30, 2019.

    

The ABL Facility also provides for the issuance of up to $15.0 million of letters of credit that, when outstanding, are applied against the $100.0 million limit. At September 30, 2019, $9.6 million in letters of credit and other reserves were outstanding. Remaining unused availability under the ABL Facility was $49.4 million at September 30, 2019, compared to $71.6 million at December 31, 2018.

 

On June 17, 2019, Crisa Libbey Mexico S. de R.L. de C.V. entered into a $3.0 million working capital line of credit with Banco Santander Mexico to cover seasonal working capital needs, guaranteed by its parent company, Libbey Mexico, S. de R.L. de C.V. The line of credit matures on December 14, 2020, and has a floating interest rate of LIBOR plus 3.20 percent. At September 30, 2019, there were no borrowings under this line of credit. Interest with respect to borrowings on the line of credit is due monthly.

 

 

5.    Income Taxes

 

For interim tax reporting, we estimate our annual effective tax rate and apply it to our year-to-date ordinary income. Tax jurisdictions with a projected or year-to-date loss for which a tax benefit cannot be realized are excluded from the annualized effective tax rate. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are reported in the interim period in which they occur.

 

Our effective tax rate was (14.4) percent for the nine months ended September 30, 2019, compared to 314.3 percent for the nine months ended September 30, 2018. Our effective tax rate for the nine months ended September 30, 2019, was negative because the company recorded positive tax expense despite incurring an overall pretax loss. This occurred because the pretax loss was driven by nondeductible expenses, principally the nondeductible goodwill impairment recorded in the second quarter of the year and nondeductible interest.

 

The Company and its subsidiaries are subject to examination by various countries' tax authorities. These examinations may lead to proposed or assessed adjustments to our taxes. In August 2016, the Mexican tax authority (SAT) assessed one of our Mexican subsidiaries related to the audit of its 2010 tax year. The amount assessed was approximately 3 billion Mexican pesos, which was equivalent to approximately $157 million U.S. dollars as of the date of the assessment. The Company has filed an administrative appeal with SAT requesting that the assessment be fully nullified. We are awaiting the outcome of the appeal. Management, in consultation with external legal counsel, believes that if contested in the Mexican court system, it is more likely than not that the Company would prevail on all significant components of the assessment. Management intends to continue to vigorously contest in the Mexican courts all significant components of the assessment that are not nullified at the administrative appeal level. We believe that our tax reserves related to uncertain tax positions are adequate at this time.

 

 

 

6.    Pension and Non-pension Post-retirement Benefits

 

The components of our net pension expense, including the SERP (supplemental employee retirement plan), are as follows:

 

Three months ended September 30,

 

U.S. Plans

   

Non-U.S. Plans

   

Total

 

(dollars in thousands)

 

2019

   

2018

   

2019

   

2018

   

2019

   

2018

 

Service cost

  $ 783     $ 1,003     $ 256     $ 289     $ 1,039     $ 1,292  

Interest cost

    3,382       3,154       761       755       4,143       3,909  

Expected return on plan assets

    (5,194 )     (5,665 )                 (5,194 )     (5,665 )

Amortization of unrecognized:

                                               

Prior service cost (credit)

                (49 )     (51 )     (49 )     (51 )

Actuarial loss

    1,087       1,618       102       158       1,189       1,776  

Pension expense

  $ 58     $ 110     $ 1,070     $ 1,151     $ 1,128     $ 1,261  

 

Nine months ended September 30,

 

U.S. Plans

   

Non-U.S. Plans

   

Total

 

(dollars in thousands)

 

2019

   

2018

   

2019

   

2018

   

2019

   

2018

 

Service cost

  $ 2,349     $ 3,007     $ 775     $ 865     $ 3,124     $ 3,872  

Interest cost

    10,146       9,461       2,302       2,259       12,448       11,720  

Expected return on plan assets

    (15,580 )     (16,994 )                 (15,580 )     (16,994 )

Amortization of unrecognized:

                                               

Prior service cost (credit)

          1       (150 )     (152 )     (150 )     (151 )

Actuarial loss

    3,262       4,854       310       471       3,572       5,325  

Pension expense

  $ 177     $ 329     $ 3,237     $ 3,443     $ 3,414     $ 3,772  

 

We have contributed $0.8 million and $2.5 million of cash to our pension plans for the three months and nine months ended September 30, 2019, respectively. Pension contributions for the remainder of 2019 are estimated to be $0.9 million.

 

The provision for our non-pension, post-retirement, benefit expense consists of the following:

 

Three months ended September 30,

 

U.S. Plans

   

Non-U.S. Plans

   

Total

 

(dollars in thousands)

 

2019

   

2018

   

2019

   

2018

   

2019

   

2018

 

Service cost

  $ 110     $ 151     $ 1     $ 1     $ 111     $ 152  

Interest cost

    459       456       6       9       465       465  

Amortization of unrecognized:

                                               

Prior service (credit)

    (71 )     (71 )                 (71 )     (71 )

Actuarial (gain)

    (94 )     (52 )     (14 )     (16 )     (108 )     (68 )

Non-pension post-retirement benefit expense

  $ 404     $ 484     $ (7 )   $ (6 )   $ 397     $ 478  

 

Nine months ended September 30,

 

U.S. Plans

   

Non-U.S. Plans

   

Total

 

(dollars in thousands)

 

2019

   

2018

   

2019

   

2018

   

2019

   

2018

 

Service cost

  $ 332     $ 453     $ 1     $ 1     $ 333     $ 454  

Interest cost

    1,377       1,367       24       29       1,401       1,396  

Amortization of unrecognized:

                                               

Prior service (credit)

    (212 )     (212 )                 (212 )     (212 )

Actuarial (gain)

    (282 )     (157 )     (51 )     (49 )     (333 )     (206 )

Non-pension post-retirement benefit expense

  $ 1,215     $ 1,451     $ (26 )   $ (19 )   $ 1,189     $ 1,432  

 

Our 2019 estimate of non-pension cash payments is $5.2 million, of which we have paid $0.8 million and $4.3 million for the three months and nine months ended September 30, 2019, respectively.

 

 

 

7.    Net Loss per Share of Common Stock

 

The following table sets forth the computation of basic and diluted loss per share:

 

   

Three months ended September 30,

   

Nine months ended September 30,

 

(dollars in thousands, except earnings per share)

 

2019

   

2018

   

2019

   

2018

 

Numerator for earnings per share:

                               
Net loss that is available to common shareholders   $ (3,457 )   $ (4,959 )   $ (51,766 )   $ (3,932 )
                                 

Denominator for basic earnings per share:

                               

Weighted average shares outstanding

    22,484,158       22,222,827       22,403,253       22,162,237  
                                 

Denominator for diluted earnings per share:

                               

Effect of stock options and restricted stock units

                       

Adjusted weighted average shares and assumed conversions

    22,484,158       22,222,827       22,403,253       22,162,237  
                                 
Basic loss per share   $ (0.15 )   $ (0.22 )   $ (2.31 )   $ (0.18 )
                                 
Diluted loss per share   $ (0.15 )   $ (0.22 )   $ (2.31 )   $ (0.18 )
                                 

Anti-dilutive shares excluded from computation of diluted loss per share

    1,925,173       1,270,680       1,776,055       1,230,244  

 

When applicable, diluted shares outstanding is calculated using the weighted-average number of common shares outstanding plus the dilutive effects of equity-based compensation outstanding during the period using the treasury stock method.

 

 

8.    Derivatives

 

We utilize derivative financial instruments to hedge certain interest rate risks associated with our long-term debt and commodity price risks associated with forecasted future natural gas requirements. These derivatives 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. Our contracts with counterparties generally contain right of offset provisions. These provisions effectively reduce our exposure to credit risk in situations where the Company has gain and loss positions outstanding with a single counterparty. It is our policy to offset on the Condensed Consolidated Balance Sheets the amounts recognized for derivative instruments executed with the same counterparty under a master netting agreement.

 

We do not believe we are exposed to more than a nominal amount of credit risk in our natural gas hedges and interest rate swaps as the counterparties are established financial institutions. The counterparties for the derivative agreements are rated BBB+ or better as of September 30, 2019, by Standard and Poor’s.

 

Fair Values

 

The following table provides the fair values of our derivative financial instruments for the periods presented, all of which are cash flow hedges:

 

       

Fair Value of Derivative Assets

 

(dollars in thousands)

 

Balance Sheet Location

 

September 30, 2019

   

December 31, 2018

 
Interest rate swaps   Prepaid and other current assets   $     $ 1,425  
Natural gas contracts   Prepaid and other current assets           226  
Natural gas contracts   Other assets           39  

Total derivative assets

      $     $ 1,690  

 

       

Fair Value of Derivative Liabilities

 

Interest rate swaps

 

Accrued liabilities

  $ 2,139     $  

Interest rate swaps

 

Other long-term liabilities

    13,757       5,713  

Natural gas contracts

 

Accrued liabilities

    727        

Natural gas contracts

 

Other long-term liabilities

    106        

Total derivative liabilities

      $ 16,729     $ 5,713  

 

The following table presents cash settlements (paid) received related to the below derivatives:

 

   

Three months ended September 30,

   

Nine months ended September 30,

 

(dollars in thousands)

 

2019

   

2018

   

2019

   

2018

 

Natural gas contracts

  $ (437 )   $ 48     $ (374 )   $ (186 )

Interest rate swaps

    264       123       955       (58 )

Total

  $ (173 )   $ 171     $ 581     $ (244 )

 

 

The following table provides a summary of the impacts of derivative gain (loss) of our cash flow hedges on the Condensed Consolidated Statements of Operations and other comprehensive income (OCI):

 

       

Three months ended September 30,

   

Nine months ended September 30,

 

(dollars in thousands)

 

Location

 

2019

   

2018

   

2019

   

2018

 

Derivative gain (loss) recognized into OCI:

                                   

Natural gas contracts

 

OCI

  $ (330 )   $ 179     $ (1,473 )   $ 513  

Interest rate swaps

 

OCI

    (2,234 )     (998 )     (10,699 )     735  

Total

      $ (2,564 )   $ (819 )   $ (12,172 )   $ 1,248  
                                     

Derivative gain (loss) reclassified from accumulated OCI to current earnings:

                                   

Natural gas contracts

 

Cost of Sales

  $ (438 )   $ 48     $ (375 )   $ (186 )

Interest rate swaps

 

Interest expense

    219       135       909       32  

Total

      $ (219 )   $ 183     $ 534     $ (154 )

 

Natural Gas Contracts

 

We use natural gas swap contracts related to forecasted future North American natural gas requirements. The objective of these commodity 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, 18 months in the future, or more, depending on market conditions. The fair values of these instruments are determined from market quotes.

 

The following table presents the notional amount of our natural gas derivatives on the Condensed Consolidated Balance Sheets:

 

       

Notional Amounts

 

Derivative Types

 

Unit of Measure

 

September 30, 2019

   

December 31, 2018

 

Natural gas contracts

 

Millions of British Thermal Units (MMBTUs)

    2,890,000       3,150,000  

 

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 fair value of these hedges are recorded in other comprehensive income (loss). 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 Statement of Operations.

 

Based on our current valuation, we estimate that accumulated losses for natural gas contracts currently carried in accumulated other comprehensive loss that will be reclassified into earnings over the next twelve months will result in a loss of $0.7 million in our Condensed Consolidated Statements of Operations.

 

Interest Rate Swaps

 

The table below lists the interest rate swaps we executed as part of our risk management strategy to mitigate the risks associated with the fluctuating interest rates under our Term Loan B. The interest rate swaps effectively convert a portion of our Term Loan B debt from a variable interest rate to a fixed interest rate, thus reducing the impact of interest rate changes on future income.

 

Swap execution date

 

Effective date

 

Expiration date

 

Notional amount

 

Fixed swap rate

April 1, 2015

 

January 11, 2016

 

January 9, 2020

 

$220.0 million

    4.85 %

September 24, 2018

 

January 9, 2020

 

January 9, 2025

 

$200.0 million

    6.19 % (1)

________________________

(1) 

Upon refinancing our Term Loan B, the fixed interest rate will be 3.19 percent plus the new refinanced credit spread.

 

Our interest rate swaps are valued using the market standard methodology of netting the discounted expected future variable cash receipts and the discounted future fixed cash payments. The variable cash receipts are based on an expectation of future interest rates derived from observed market interest rate forward curves.

 

Our interest rate swaps qualify and are designated as cash flow hedges at September 30, 2019, and are accounted for under FASB ASC 815, "Derivatives and Hedging." 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 are recorded to earnings immediately. Changes in the fair value of these hedges are recorded in other comprehensive income (loss). 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 an increase to interest expense of $2.1 million in our Condensed Consolidated Statements of Operations.

 

 

 

9.    Accumulated Other Comprehensive Income (Loss)

 

Accumulated other comprehensive income (loss) (AOCI), net of tax, is as follows:

 

Three months ended September 30, 2019 (dollars in thousands)   Foreign Currency Translation      

Derivative Instruments

     

Pension and Other

Post-retirement Benefits

     

Accumulated Other

Comprehensive Loss

 
Balance on June 30, 2019   $ (23,537 )     $ (10,750 )     $ (86,012 )     $ (120,299 )
                                       
Amounts recognized into AOCI     (4,543 )       (2,564 )               (7,107 )

Currency impact

                    49         49  

Amounts reclassified from AOCI

            219   (1)     961   (2)     1,180  
Tax effect     200         534         (220 )       514  
Other comprehensive income (loss), net of tax     (4,343 )       (1,811 )       790         (5,364 )
Balance on September 30, 2019   $ (27,880 )     $ (12,561 )     $ (85,222 )     $ (125,663 )

 

Nine months ended September 30, 2019 (dollars in thousands)   Foreign Currency Translation      

Derivative Instruments

     

Pension and Other

Post-retirement Benefits

     

Accumulated Other

Comprehensive Loss

 
Balance on December 31, 2018   $ (23,240 )     $ (2,866 )     $ (88,299 )     $ (114,405 )
                                       
Amounts recognized into AOCI     (4,832 )       (12,172 )       1,148         (15,856 )

Currency impact

                    (1 )       (1 )

Amounts reclassified from AOCI

            (534 )

(1)

    2,877  

(2)

    2,343  
Tax effect     192         3,011         (947 )       2,256  
Other comprehensive income (loss), net of tax     (4,640 )       (9,695 )       3,077         (11,258 )
Balance on September 30, 2019   $ (27,880 )     $ (12,561 )     $ (85,222 )     $ (125,663 )

 

Three months ended September 30, 2018 (dollars in thousands)   Foreign Currency Translation       Derivative Instruments      

Pension and Other

Post-retirement Benefits

     

Accumulated Other

Comprehensive Loss

 

Balance on June 30, 2018

  $ (19,242 )     $ 2,018       $ (85,706 )     $ (102,930 )
                                       

Amounts recognized into AOCI

    (2,707 )       (819 )               (3,526 )

Currency impact

                    (356 )       (356 )

Amounts reclassified from AOCI

            (183 )

(1)

    1,586  

(2)

    1,403  

Tax effect

            268         (356 )       (88 )

Other comprehensive income (loss), net of tax

    (2,707 )       (734 )       874         (2,567 )

Balance on September 30, 2018

  $ (21,949 )     $ 1,284       $ (84,832 )     $ (105,497 )

 

Nine months ended September 30, 2018 (dollars in thousands)   Foreign Currency Translation      

Derivative Instruments

     

Pension and Other

Post-retirement Benefits

     

Accumulated Other

Comprehensive Loss

 

Balance on December 31, 2017

  $ (16,183 )     $ 351       $ (89,340 )     $ (105,172 )
                                       

Cumulative-effect adjustment for the adoption of ASU 2017-12

            (275 )               (275 )
                                       

Amounts recognized into AOCI

    (5,766 )       1,248         1,527         (2,991 )

Currency impact

                    (316 )       (316 )

Amounts reclassified from AOCI

            154  

(1)

    4,756  

(2)

    4,910  

Tax effect

            (194 )       (1,459 )       (1,653 )

Other comprehensive income (loss), net of tax

    (5,766 )       1,208         4,508         (50 )

Balance on September 30, 2018

  $ (21,949 )     $ 1,284       $ (84,832 )     $ (105,497 )

_________________________

(1) 

We reclassified natural gas contracts through cost of sales and the interest rate swaps through interest expense on the Condensed Consolidated Statements of Operations. See note 8 for additional information.

(2) 

We reclassified the net pension and non-pension post-retirement benefits amortization and settlement charges through other income (expense) on the Condensed Consolidated Statements of Operations. See note 6 for additional information.

 

 

 

10.    Segments

 

Our reporting segments align with our regionally focused organizational structure, which we believe enables us to better serve customers across the globe. Under this structure, we report financial results for U.S. and Canada; Latin America; Europe, the Middle East and Africa (EMEA); and Other. Segment results are based primarily on the geographical destination of the sale. Our three reportable segments are defined below. Our operating segment that does not meet the criteria to be a reportable segment is disclosed as Other.

 

U.S. & Canada—includes sales of manufactured and sourced tableware having an end-market destination in the U.S and Canada, excluding glass products for Original Equipment Manufacturers (OEM), which remain in the Latin America segment.

 

Latin America—includes primarily sales of manufactured and sourced glass tableware having an end-market destination in Latin America, as well as glass products for OEMs regardless of end–market destination.

 

EMEA—includes primarily sales of manufactured and sourced glass tableware having an end-market destination in Europe, the Middle East and Africa.

 

Other—includes primarily sales of manufactured and sourced glass tableware having an end-market destination in Asia Pacific.

 

Our measure of profit for our reportable segments is Segment Earnings before Interest and Taxes (Segment EBIT) 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. Segment EBIT also includes an allocation of manufacturing costs for inventory produced at a Libbey facility that is located in a region other than the end market in which the inventory is sold. This allocation can fluctuate from year to year based on the relative demands for products produced in regions other than the end markets in which they are sold. We use Segment EBIT, along with net sales and selected cash flow information, to evaluate performance and to allocate resources. Segment EBIT for reportable segments includes an allocation of some corporate expenses based on the costs of services performed.

 

Certain activities not related to any particular reportable segment are reported within retained corporate costs. These costs include certain headquarter, administrative and facility costs, and other costs that are global in nature and are not allocable to the reporting segments.

 

The accounting policies of the reportable segments are the same as those described in note 2. We do not have any customers who represent 10 percent or more of total sales. Inter-segment sales are consummated at arm’s length and are reflected at end-market reporting below.

 

   

Three months ended September 30,

   

Nine months ended September 30,

 

(dollars in thousands)

 

2019

   

2018

   

2019

   

2018

 

Net Sales:

                               
U.S. & Canada   $ 119,351     $ 115,304     $ 358,154     $ 351,719  
Latin America     35,308       35,406       103,917       110,029  
EMEA     31,736       33,289       92,456       103,712  
Other     6,023       6,776       19,015       20,762  
Consolidated   $ 192,418     $ 190,775     $ 573,542     $ 586,222  
                                 

Segment EBIT:

                               
U.S. & Canada   $ 9,038     $ 7,538     $ 36,102     $ 25,620  
Latin America     4,363       1,727       8,199       11,310  
EMEA     931       1,358       3,644       4,984  
Other     (174 )     852       (2,495 )     383  
Total Segment EBIT   $ 14,158     $ 11,475     $ 45,450     $ 42,297  
                                 

Reconciliation of Segment EBIT to Net Loss:

                               
Segment EBIT   $ 14,158     $ 11,475     $ 45,450     $ 42,297  
Retained corporate costs     (7,391 )     (6,683 )     (23,597 )     (21,929 )
Impairment of goodwill and other intangible assets (note 16)                 (46,881 )      
Fees associated with strategic initiative           (2,341 )           (2,341 )
Organizational realignment     (3,017 )           (3,017 )      
Interest expense     (5,699 )     (5,652 )     (17,210 )     (16,192 )
Provision for income taxes     (1,508 )     (1,758 )     (6,511 )     (5,767 )
Net loss   $ (3,457 )   $ (4,959 )   $